Canada’s inflation drops to 2.8% in June as gas prices fall: StatCan

Statistics Canada says the annual rate of inflation has eased in June, now at 2.8 per cent due to lower gas prices.

StatCan says inflation was at a recent high of 3.2 per cent in May and is now lower than most economists had anticipated.

The agency reports a 10 per cent drop in the cost of gasoline month-over-month to explain the decline.

Over the spring, gas prices rose due to the conflict in the Middle East. However, a tentative peace agreement between the United States and Iran took pressure off global oil prices over the course of June.

In recent weeks, renewed hostilities between the nations have driven gas prices back up.

StatCan says if gas prices were taken out of the equation, inflation was unchanged at 2.2 per cent from May to June.

READ MORE: Unemployment rate drops to 6.5%, 18K jobs added: StatCan

On Monday, TD Bank senior economist Leslie Preston said in a note to clients that rising gas prices in July means the June drop likely won’t be repeated, but she still thinks inflation has peaked for 2026.

At grocery stores, price hikes also eased to 3.9 per cent in June, dropping from 4.3 per cent in May.

Air transportation costs also jumped 9.6 per cent annually, marking the biggest increase in over three years due to high domestic demand and FIFA World Cup games in Toronto and Vancouver.

Last week, the Bank of Canada held its benchmark interest rate steady at 2.25 per cent.

BMO macro strategist Benjamin Reitzes describes Canada’s current inflation as “benign,” noting that weak economic demand is preventing businesses from raising prices.

With Files From The Canadian Press

WATCH MORE: Bank of Canada leaves key rate unchanged