Canada’s annual inflation rate eases to 2.8% in June as gasoline prices fall

Canada’s annual inflation rate slowed to 2.8 per cent in June, down from 3.2 per cent in May, largely because of lower gasoline prices, according to Statistics Canada.

The federal agency said a decline in fuel prices helped ease overall inflation pressures. Grocery prices also continued to rise, but at a slower pace, increasing 3.9 per cent year over year in June compared with 4.3 per cent in May.

Despite the slowdown, grocery inflation remained above the overall inflation rate for a 17th consecutive month, highlighting the continued impact of higher food costs on Canadian households.

The Bank of Canada kept its key policy interest rate unchanged at 2.25 per cent at its most recent rate announcement, marking the sixth consecutive decision to hold rates steady. The central bank said the economic impact of the Iran conflict on inflation appeared to be limited.

Statistics Canada attributed much of June’s decline in gasoline prices to lower global oil prices following a ceasefire agreement involving the United States and Iran. However, the agency noted that renewed tensions between the two countries in recent weeks have begun putting upward pressure on fuel prices again.