Yesterday, several critical economic announcements gave some insight into the health of the global economy as we enter the second half of the year. The outlook has been clouded in recent days with the announcement of higher tariffs on several economies around the world, including Canada. The Canadian and US inflation reports were announced yesterday, which gave markets some data to bet on whether rate cuts are coming in July. Meanwhile, China released its economic growth rate for the second quarter of 2025.

• Canada’s annual inflation rate rose to 1.9% in June from 1.7% in May. This was the fastest pace of inflation since March 2025 but remained below the Bank of Canada’s (BoC) 2% target. Inflation was expected to pick up as trade tensions continue and disrupt the supply chain.
• Prices for fuel dropped in June at a slower pace than in May. The growth of food prices moderated in June. Meanwhile, prices for vehicles and furniture increased faster in June than in the previous month.
• Two core measures of inflation accelerated in June, as tracked by the BoC.
• In the US, the annual inflation rate increased to 2.7% in June from 2.4% in May. The US Federal Reserve Board (Fed) has expressed concern that tariffs could push prices higher.
• China announced its economy grew by 5.2% year-over-year in the second quarter, moderating slightly from the first quarter’s 5.4% expansion. The economy benefited from stronger industrial output. Domestic demand remains relatively soft.

The BoC and Fed make their next interest rate announcements later this month. Both have held steady at recent meetings as they seek to monitor how tariffs will impact their respective economies. In Canada, inflation appears to be contained but could change quickly given Canada is facing the possibility of more tariffs from the US.

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