The Consumer Price Index (CPI) rose 2.8 per cent year over year in June, following a 3.4 per cent increase in May. While deceleration was fairly broad-based, another base-year effect in gasoline prices led the slowdown in the CPI. Excluding gasoline, headline inflation would have been 4.0 per cent in June, following a 4.4 per cent increase in May, reported Statistics Canada on Tuesday.
Gustavo Fring
“Canadians continued to see elevated grocery prices (+9.1 per cent) and mortgage interest costs (+30.1 per cent) in June, with those indexes contributing the most to the headline CPI increase. The all-items excluding food index rose 1.7 per cent and the all-items excluding mortgage interest cost index rose 2.0 per cent,” said the federal agency.
“On a monthly basis, the CPI edged up 0.1 per cent in June, following a 0.4 per cent gain in May. After contributing to the increase in May, travel tours put downward pressure on the monthly all-items index in June. On a seasonally adjusted monthly basis, the CPI also rose 0.1 per cent.”
StatsCan said gasoline prices fell 21.6 per cent year over year in June following an 18.3 per cent decline in May. The year-over-year decrease was a result of elevated prices in June 2022 amid higher global demand for crude oil as China, the largest importer of crude oil, eased some COVID-19 public health restrictions. In June, consumers paid 1.9 per cent more at the pump compared with May.
“Grocery prices remain one of the largest contributors to the all-items CPI, with a 9.1 per cent year-over-year increase in June, nearly unchanged from the increase in May (+9.0 per cent). The largest contributors within the food component were meat (+6.9 per cent), bakery products (+12.9 per cent), dairy products (+7.4 per cent) and other food preparations (+10.2 per cent),” said the report.
“Fresh fruit prices grew at a faster pace year over year in June (+10.4 per cent) than in May (+5.7 per cent), driven, in part, by a 30 per cent month-over-month increase in the price of grapes.
“Food purchased from restaurants continued to contribute to the headline CPI increase, albeit at a slower year-over-year pace in June (+6.6 per cent) than in May (+6.8 per cent).”
Andrew Grantham
Andrew Grantham, Senior Economist with CIBC Capital Markets, said that while the deceleration in inflation was largely due to gasoline prices today being compared to the very peaks seen in 2022, there were also some encouraging signs of weakening price pressures elsewhere as well.
“Seasonally adjusted prices excluding food/energy rose by a mere 0.1 per cent for a second successive month, while the monthly increase in food prices was weaker than in May (although food price inflation remains a strong 8.3 per centon a year-over-year basis). However, despite some of these encouraging signs, the Bank of Canada’s core trim and median measures printed slightly above consensus expectations and were little changed on a three-month annualized basis,” he said.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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