Inflation in Canada Drops to Lowest Level in Over Two Years
Inflation Falls to 2.8% in June
Statistics Canada released data on July 18th, revealing that Canada's inflation rate has fallen to 2.8% in June. This represents the lowest level of inflation in over two years and marks a significant decline from the 3.4% rate recorded in May.
Broad-Based Deceleration
The decrease in inflation was broad-based, with falling prices in several categories. The most notable contributor to the decline was the sharp decrease in gasoline prices, which fell by 12.3% in June. Other categories that saw price reductions included transportation, food, and shelter.
Impact on Bank of Canada Policy
The Bank of Canada had been closely monitoring inflation, as it has been above its 3% upper target range for more than two years. The recent decline in inflation may provide some relief to the Bank and reduce pressure for further interest rate hikes.
Consumer Price Index
The Consumer Price Index (CPI), which measures the change in prices of a representative basket of goods and services, recorded a year-over-year increase of 2.8% in June. This represents a slight decrease from the 2.9% increase reported in May.
Conclusion
The latest inflation data suggests that inflationary pressures in Canada are easing. While inflation remains above the Bank of Canada's target range, the recent decline is a positive sign and may lead to a more moderate pace of interest rate hikes in the future.
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