Canada’s annual inflation rate slowed to 2.8 per cent in June as consumers paid less for gasoline than they did in May, Statistics Canada reported Monday.
The latest Consumer Price Index reading marked a notable decline from the 3.2 per cent annual inflation rate recorded in May. The CPI serves as the main measure of changing consumer prices across Canada.
Gasoline prices climbed sharply during the spring, largely due to conflict in the Middle East. A tentative peace agreement between the United States and Iran later eased pressure on global oil markets throughout June.
Renewed hostilities have since pushed pump prices higher again in recent weeks.
When gasoline prices were excluded, annual inflation held steady at 2.2 per cent from May to June, Statistics Canada said.
Grocery price inflation also eased, falling to 3.9 per cent in June from 4.3 per cent in May. Despite the slowdown, grocery prices rose faster than headline inflation for the 17th consecutive month.
Fresh fruit prices increased at a slower annual rate, mainly due to lower grape prices. Those gains were partly offset by faster price increases for fresh or frozen chicken, selected bakery products and frozen food items.
FIFA World Cup matches in Toronto and Vancouver contributed to a sharp increase in travel-related expenses, including hotel rooms and rental vehicles.
Traveller accommodation prices rose about 20 per cent year over year in both Ontario and British Columbia during June.
Air transportation costs increased 9.6 per cent annually, the largest rise recorded in more than three years. Statistics Canada attributed the increase to higher jet fuel prices and stronger demand for domestic travel.
The Bank of Canada has held its key interest rate at 2.25 per cent for six consecutive meetings. The central bank aims to keep annual inflation within its target range of one to three per cent.
During its latest rate announcement, the bank said there were few indications that price pressures linked to the Iran conflict had spread into broader inflation. Future interest-rate decisions will depend on whether renewed energy price increases begin affecting other parts of the economy.
