Canada Inflation Research Brief

Underlying inflation pressures remain subdued. Canada’s consumer price index declined 10 basis points month-over-month in June, lowering the annual inflation rate 40 basis points to 2.8 per cent. Sharply lower gasoline prices were the primary driver, partially reversing the energy-related surge recorded earlier in the spring. Price pressures were generally contained elsewhere, as food prices were unchanged during the month and shelter costs increased only modestly. Travel-related categories were the main exception, with World Cup activity contributing to higher prices for vehicle rental, accommodations, and travel services. More importantly, the Bank of Canada’s preferred core measures both slipped below 2 per cent. At the same time, inflation breadth remained limited, indicating that earlier increases in energy and other input costs have not generated widespread or persistent price pressures.