Canada’s inflation rate tumbles to 2.8 per cent in June even as grocery prices remain high

OTTAWA –

Statistics Canada says Canada’s inflation charge tumbled to 2.8 per cent in June, placing it inside the Bank of Canada’s goal vary for the primary time in additional than two years.

Statistics Canada’s client value index report Tuesday says the deceleration was broad-based, although decrease gasoline costs in contrast with final yr led the slowdown.

But Canadians proceed to pay considerably increased costs for groceries, as costs rose 9.1 per cent year-over-year, barely sooner than in May.

The annual inflation charge was 3.4 per cent in May. The final time it fell beneath three per cent was March 2021.

The Bank of Canada raised rates of interest once more earlier this month, partially as a result of its now projecting inflation to remain excessive for longer.

The central financial institution mentioned it expects inflation to hover round three per cent over the subsequent yr, earlier than steadily declining to 2 per cent by mid-2025.

Tuesday’s report exhibits inflation falling inside the central financial institution’s one to a few per cent vary, although the Bank of Canada has been adamant that it is aiming for 2 per cent inflation.

The charge hikes are supposed to choke off demand within the economic system by making it dearer for shoppers and companies to borrow.

That course of is meant to convey inflation down, although within the meantime, it is driving up the curiosity Canadians pay on their mortgages.

The federal company says exclude mortgage curiosity prices, the annual inflation charge would have been two per cent.

Tuesday’s report exhibits costs for a variety of products and companies are moderating, serving nearly as good news for shoppers who’ve been dealing with steep value will increase for the reason that pandemic.

Transportation prices, for instance, decreased year-over-year as gasoline costs have fallen and the tempo of value development for automobiles decreases.

Consumers additionally paid 14.7 per cent much less for mobile companies than they did a yr in the past, which the federal company says is because of decrease costs for information plans and gross sales promotions.

This report by The Canadian Press was first printed July 18, 2023.