Inflation in Canada declines as fuel prices fall

Inflation declined last month in Canada to its lowest rate since March 2021, even though grocery prices rose sharply again, the government reported Tuesday.

The consumer price index rose by 2.8 percent in June, down from 3.4 percent in May, Statistics Canada said. The rate spiked a year ago in June 2022 to 8.1 percent.

“While deceleration was fairly broad-based, another base-year effect in gasoline prices led the slowdown in the CPI,” the agency said.

Gasoline prices fell 21.6 percent year over year in June following an 18.3 percent decline in May.

Excluding gasoline, headline inflation would have been 4.0 percent in June, following a 4.4 percent increase in May.

Grocery prices rose 9.1 percent in June.

“The latest projections from the central bank suggest a very gradual deceleration in price growth, with inflation not reaching 2 percent until mid-2025 –- two years from now,” said Royce Mendes, an analyst at the bank Desjardins, who said he does not rule out a rise in the coming months.

Transport Minister Omar Alghabra tweeted: “Good news: Canada’s inflation rate drops to 2.8%, which is lower than most comparable countries in the world, lower than the US, Japan, France, UK, and Australia to name a few.”