Canada’s annual inflation rate rose to 1.9% in June, driven primarily by higher vehicle prices, according to Statistics Canada. This marked an increase from May’s 1.7% and was in line with economists’ expectations.
Gasoline prices held relatively steady, as the impact of rising crude oil prices and geopolitical tensions was balanced by a significant drop in prices from the previous year, contributing to the overall inflation rise.
When energy prices are excluded, core inflation reached 2.7%. The removal of the federal carbon tax in April continued to ease year-over-year comparisons.
Food inflation slowed to 2.9%, down from 3.4%, offering some relief to consumers as fresh vegetable prices declined. Shelter inflation also edged down slightly to 2.9%.
Vehicle prices rose sharply by 4.1%, largely due to tight inventory levels and a rebound in used car prices after 18 months of declines. Furniture and other durable goods also recorded stronger price increases.
These June inflation figures will be closely monitored by the Bank of Canada ahead of its July 30 interest rate decision, especially as core inflation remains near 3%, the upper end of the central bank’s target range.
