Inflation In Canada Drops As Fuel Prices Fall

Inflation declined last month in Canada to its lowest rate since March 2021, although grocery prices increased sharply again, the government stated Tuesday.

The consumer price index increased by 2.8 percent in June, down from 3.4 percent in May, Statistics Canada said. The rate spiked a year ago in June 2022 to 8.1 percent.

“While deceleration was fairly broad-based, another base-year effect in gasoline prices led the slowdown in the CPI,” the agency said.

Gasoline prices declined 21.6 percent year over year in June following an 18.3 percent decline in May.

Excluding gasoline, headline inflation would have been 4.0 percent in June, following a 4.4 percent increase in May.

“The latest projections from the central bank suggest a very gradual deceleration in price growth, with inflation not reaching 2 percent until mid-2025 –- two years from now,” said Royce Mendes, an analyst at the bank Desjardins.

Transport Minister Omar Alghabra tweeted: “Good news: Canada’s inflation rate drops to 2.8%, which is lower than most comparable countries in the world, lower than the US, Japan, France, UK, and Australia to name a few.”