Inflation cools ahead of Bank of Canada rate decision

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Canada’s annual inflation rate slowed to 2.7 per cent in June from 2.9 per cent a month earlier, ahead of a Bank of Canada interest rate decision next week.

A slowdown in gas prices — which were up 0.4 per cent year-over-year compared to a 5.6 per cent increase in May —  was attributed to an announcement by the Organization of the Petroleum Exporting Countries (OPEC) that it will re-open refineries for production following a spring maintenance shutdown. Excluding gasoline, inflation would have decelerated to 2.8 per cent.

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Other components that fell in June included shelter inflation, which rose by 6.2 per cent year-over-year, down from a 6.4 per cent in May.

The price of durable goods declined year-over-year by 1.8 per cent, driven by the largest decline in passenger vehicle sales since February of 2015. However, despite continued improvements in the price of goods, the price of services grew at an elevated rate of 4.8 per cent year-over-year in June, up from 4.6 per cent in May.

Another sticky point was the cost of food bought at stores, which rose year-over-year by 2.1 per cent in June, up from 1.5 per cent in May. Over the past three years, the price of food purchased in stores has risen by 21.9 per cent, but inflation in this category has been trending down since January of 2023.

Core measures of inflation, the data the Bank of Canada prefers to look at when makings it monetary policy decisions, continued their downward trajectory.

• Email: jgowling@postmedia.com

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