The Consumer Price Index (CPI) rose 2.7% on a year-over-year basis in June, down from a 2.9% gain in May. The deceleration was largely the result of slower year-over-year growth in gasoline prices, which rose 0.4% in June following a 5.6% increase in May. Excluding gasoline, the CPI rose 2.8% in June, reported Statistics Canada on Tuesday.
Jack Sparrow
Year over year, lower prices for durable goods (-1.8%) also contributed to the slowdown in the all-items CPI in June. Moderating the deceleration was an increase in prices for food purchased from stores (+2.1%), as well as a smaller decline for cellular services in June (-12.8%) compared with May (-19.4%), said the federal agency.
On a monthly basis, the CPI fell 0.1% in June, following a 0.6% increase in May. The monthly decrease was driven by lower prices for travel tours (-11.1%) and gasoline (-3.1%). On a seasonally adjusted monthly basis, the CPI rose 0.1% in June, added the report.
“Year over year, gasoline prices rose at a slower pace in June (+0.4%) compared with May (+5.6%), stemming from a month-over-month decline of 3.1%. This monthly decrease coincided with an announcement from the Organization of the Petroleum Exporting Countries and its partners (OPEC+) to gradually phase out voluntary production cuts later this year and the restart of production for some refineries following shutdowns for spring maintenance,” said StatsCan.
“Today’s CPI report was a bit of a mixed bag. While headline inflation got back on track in June, the three-month annualized pace of core inflation has now been rising for three straight months. This infers that the annual pace of inflation should remain in the upper end of the BoC’s 1% to 3% range over the coming months. This has been propelled, not just by shelter prices, but also by price gains in “nice-to-haves” like the cost of dining out, health spending, and household operations,” added James Orlando, Senior Economist with TD Economics.
“The BoC is set to make a rate announcement next week and today’s report has increased odds of back-to-back rate cuts. Recent data have supported a cut, with the job market loosening and wage gains decelerating from elevated levels. From our view, the story hasn’t changed. The BoC is in a cutting cycle. Whether or not it follows through with a slightly quicker pace of cuts next week, Canadians should expect rates to be steadily reduced over the rest of this year and next.”
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. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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