OTTAWA--Canadian inflation eased last month as drivers saw some relief at the pumps.
The consumer-price index fell 0.4% in June, representing the steepest decline in 18 months and cooling the annual rate 0.4 percentage point to 2.8%, Statistics Canada said Monday.
The largest drag came from a more modest increase in gasoline prices, which more than offset a jump in travel-related costs as the World Cup kicked off.
Economists were expecting inflation to have decelerated to 3%, the top end of the 1%-to-3% target the Bank of Canada aims for. Stripping out gasoline, annual inflation held steady at 2.2%.
The central bank projects inflation will slow to about 2.5% in the second half of the year, and then return to its 2% goal by early 2027.
Gasoline prices dropped 10.2% between May and June as diplomatic talks and an interim ceasefire in the Middle East led to a retreat in global oil prices. Gas was still up a steep 20.5% in June compared with a year earlier, though that compared with a 33.2% spike in May.
The Bank of Canada has cautioned oil prices remain volatile and highly dependent on the conflict between the U.S. and Iran, which has flared up again in recent days.
The central bank last week for a sixth time in a row left its policy interest rate unchanged amid signs the economy is recovering after two straight quarters of weakness. There has been to date little sign that elevated energy costs are spilling over more broadly, and Bank of Canada Gov. Tiff Macklem has said inflation is being held back by continued slack in Canada's economy.
The trimmed mean and weighted median measures of underlying inflation preferred by the Bank of Canada averaged 1.85% annually in June, a level that was last that low in September 2020.
While consumers caught a break on gas prices, the cost of traveller accommodation accelerated last month, rising 10.1% year over year. The rise was led by Toronto and by Vancouver, British Columbia, which together hosted 10 of the World Cup tournament's 79 games.
The cost of travel tours also rose more steeply in June, and prices for air travel increased at their fastest rate since February 2023 on the back of increased demand for domestic travel and higher jet-fuel costs.
Canadians saw their grocery costs rise less steeply in the latest month, with food bought at stores rising 3.9%, though that for a 17th consecutive month outpaced headline inflation.
Prices for new and used vehicles contributed to the softest rise in passenger-vehicle costs since March of last year. Internet-access services fell for the month, following a modest rise in prices in May.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
July 20, 2026 09:00 ET (13:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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