Statistics Canada released Canada’s consumer price index data for June yesterday. Markets were paying close attention to the results to see if inflationary pressures were subsiding, and what that might mean for the Bank of Canada’s (BoC) monetary policy. Data showed that Canada’s inflation rate softened in June amid a decline in oil prices. The conflict in the Middle East had sent oil prices skyrocketing but prices have pulled back in recent months, particularly in June when the US and Iran reached an interim peace deal.

• Canada’s annual inflation rate fell to 2.8% in June from 3.2% in the previous month. The decline was bigger than economists had expected, estimating annual inflation to be 2.9%, according to a Bloomberg survey.
• June’s slowdown in annual inflation was in response to moderating growth of gasoline prices, which rose by 20.5% year over year compared to 33.2% in May. The price growth for food, shelter and health care also softened in June.
• Recent price pressures were largely contained to energy and energy-related products. Core inflationary pressures have been tame. The two key measures of core inflation, trim and mean, fell to 1.9% and 1.8%, respectively.
• Consumer prices declined by 0.4% in June over the previous month. This marked the first decline since December 2025.

June’s slowdown reinforced the BoC’s decision to hold interest rates steady at recent meetings. Since June, oil prices have again risen with tensions between the US and Iran escalating in recent weeks, reigniting concerns about elevated inflationary pressures. Yesterday, attacks in the Middle East continued, but mediators are stepping in and urging the US and Iran to get back to the negotiating table. Consumer price pressures have come down in Canada, but risks to the upside persist.

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