Canada’s inflation rate falls to 2% in June thanks to gas price drop

Canada's annual inflation rate slowed to two per cent in June, down from 2.4 per cent in May, thanks mostly to lower gasoline prices. THE CANADIAN PRESS/Christopher Katsarov

Canada’s price picture softened to two per cent last month following a sharp drop in gasoline prices compared to a year ago.

Statistics Canada’s annual inflation rate for June came down from 2.4 per cent in May. The result matched the expectations of economists, according to Thomson Reuters Eikon.

Consumers paid more last month compared with a year earlier for fresh vegetables, auto insurance and mortgage borrowing costs, while they saw lower price tags for gas, internet services and digital equipment.

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Leaving out gas prices, Statistics Canada says last month’s annual inflation number was 2.6 per cent. The average of Canada’s three gauges for core inflation, which are considered better measures of underlying price pressures by omitting volatile items like gasoline, decelerated slightly to 2.03 per cent, down from 2.07 per cent the previous month.

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At two per cent, the June inflation number is right within the Bank of Canada’s ideal range, which relieves the central bank of pressure to adjust its trend-setting interest rate, RBC economist Josh Nye wrote in a note to clients.

“For now, inflation is sitting pretty at the [central bank’s} target, giving it time to be patient and see how activity is impacted by uncertainty and global headwinds,” Nye wrote.

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— With files from Erica Alini at Global News