Canadian Inflation Eases to 2.8% in June as Gasoline Cools

Canada's headline inflation rate fell to 2.8 percent in June from 3.2 percent in May, Statistics Canada reported on July 20, coming in slightly below the 2.9 percent economists had expected. The pullback was driven mainly by a deceleration in gasoline prices, which had surged the previous month as the conflict in the Middle East disrupted energy supplies and pushed pump prices to multi-year highs before oil markets cooled following a tentative peace deal. Year over year, prices rose more slowly in June than in May across almost every province. The Bank of Canada's preferred core measures, which strip out the most volatile items, remained near 2 percent, suggesting underlying price pressures stayed contained. Shelter costs, the largest component of the consumer price basket and heavily influenced by mortgage interest and rents, continued to ease as the effects of earlier rate cuts filtered through. The softer reading gives the central bank room to keep its policy rate at 2.25 percent when it meets on July 30, a stance that helps stabilise borrowing costs for households renewing or taking out mortgages. Economists cautioned that trade tensions and tariffs remain a potential upside risk to prices later in the year.