Still, food prices remain resolutely high
Canada’s annual inflation rate plunged to 2.8% in June as gas prices continued to fall, bringing yearly price growth within the Bank of Canada’s target range of 1% to 3%.
Statistics Canada said on Tuesday that the Consumer Price Index (CPI), which tallies several key measures of inflation, dropped by more than expected last month, although food prices remained resolutely high with grocery costs jumping by 9.1% over the same time last year.
The central bank’s flurry of rate hikes over the past year are also playing their part in driving inflation up, with surging mortgage interest costs – up by 30.1% – contributing significantly to annual price appreciation in June.
The inflation figure excluding mortgage interest costs would have been 2%, StatCan said – the exact rate that the Bank of Canada is hoping it will ultimately land at. However, without factoring in the gas price slowdown, inflation would have tallied 4% on a yearly basis.
Canada’s central bank will likely see the news as a further step in the right direction, with inflation having ticked resolutely downwards – bar an unexpected increase in April of this year – since hitting a 39-year high of 8.1% in June 2022.
The Bank has hiked its trendsetting interest rate by 475 basis points since March of last year in an effort to curb that rampant inflation and cool an economy whose continued resilience has surprised many observers.
