‘Data for Business’ is an effort of the Langley Chamber, in partnership with the Canadian Chamber’s Business Data Lab, to bring our members reports, stats, and analysis on economic and business data to help inform business and investment decisions. Read our latest update below:

Canada’s inflation rate eased more than expected in June, falling to 2.8% from 3.2% in May, with lower gasoline prices doing much of the work. BC matched the national rate at 2.8%, offering some relief for households and businesses after months of cost pressure.

The bigger signal for business is that underlying inflation also continued to soften, suggesting that recent energy price spikes have not spread broadly through the economy.

Grocery prices are still rising faster than overall inflation, and travel-related costs increased in BC and Ontario due in part to World Cup activity in Vancouver and Toronto, but the June data gives the Bank of Canada more room to stay on the sidelines rather than consider another rate increase.

Key Takeaways

Canadian inflation cooled more than expected in June, with gasoline prices doing most of the heavy lifting. Headline CPI slowed to 2.8% from 3.2% in May. Prices fell 0.4% on the month, the largest decline since December 2024, and were down 0.1% seasonally adjusted.

More encouragingly, underlying inflation continued to soften. Core CPI measures averaged below 2% for the first time in nearly six years. This suggests that the energy shock has not spread broadly through the consumer basket and that excess capacity in the economy is still helping to contain prices.

Gasoline prices dropped 10% in June as oil prices temporarily retreated on the news that the U.S. and Iran agreed on a ceasefire. Gasoline prices have since risen slightly and are 21% higher than a year ago. Excluding gasoline, inflation held steady at 2.2%.

Grocery inflation surprisingly eased to 3.9% from 4.3%, although it remains above headline inflation for more than a year now. Slower fresh fruit inflation is also welcome news. However, Canadians continued to pay more for groceries compared to restaurants.

Shelter inflation slowed further to 1.5% from 1.7%. Mortgage interest costs fell 0.3% from a year ago and homeowners’ replacement costs declined 2.4%, reflecting softer borrowing costs and housing activity. Rent inflation remained firmer at 3.5%.

The World Cup provided some upward pressure on accommodations with prices jumping 10.1%, led by Ontario and British Columbia, where Toronto and Vancouver hosted matches. Airfares rose 9.6%, travel tours increased 6.8% and rental vehicle prices were also up 6.8%.
 
Commentary:

Despite the hot weather, June inflation cooled, offering Canadians a bit of relief. While lower gasoline prices drove much of the decline, the more important signal for the Bank of Canada is that underlying inflation also eased, with its preferred core measures now averaging below 2%. Higher energy costs still have not spread broadly across the economy. This report was marginally better than the Bank expected and further reduces the likelihood of a rate increase. – Andrew DiCapua, Principal Economist, Canadian Chamber of Commerce