StatCan Reports Inflation Drops to 2.7% in June due to Decreased Gas Prices-led Growth
Canada’s annual inflation rate fell to 2.7 percent in June, with Statistics Canada largely attributing the deceleration to slower year-over-year growth in gasoline prices.
The agency reported on July 16 that gasoline prices rose 0.4 percent in June following a 5.6 percent jump in May. Excluding gasoline, the consumer price index rose 2.8 percent in June.
The annual inflation rate for May was 2.9 percent.
StatCan said lower prices for durable goods also contributed to the overall slowdown in June, falling 1.8 percent year-over-year in the month following a 0.8 percent decline in May.
Meanwhile, grocery prices rose 2.1 percent year-over-year in June, up from May when they increased 1.5 percent from the same month a year earlier.
It marked the second consecutive month that the pace of growth in grocery prices accelerated.
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Fresh vegetables saw a 3.8 percent gain and dairy product prices grew two percent. The price of preserved fruit and fruit preparations grew 9.5 percent, while non-alcoholic beverage costs rose 5.6 percent.
Fresh fruit prices helped moderate the increase in overall grocery prices, falling 5.2 percent in June compared with a 2.8 percent drop in May.
The June inflation reading is the last before the Bank of Canada’s next interest rate decision, set for July 24. The central bank, which targets an annual inflation rate of two percent, cut its benchmark interest rate by a quarter of a percentage point earlier this month to 4.75 percent.
CIBC senior economist Katherine Judge said the June inflation data “gave the Bank of Canada what it needed in order to cut interest rates at next week’s meeting.”
She said that core inflation, which excludes food and energy prices that tend to be more volatile, ticked up 0.2 percent on a seasonally adjusted basis, down from last month’s 0.3 percent gain.
“This shows that the prior month’s upside surprise in inflation was just a blip in a broader trend of disinflation as demand in the economy remains under pressure,” Ms. Judge said in a note.
