Canada’s inflation rate rose slightly to 1.9% in June, up from 1.7% in May. This small increase was expected by analysts, but it’s still a key signal.
Prices for cars, clothes, and shelter pushed the consumer price index (CPI) higher. The jump in prices for automobiles was big—4.1% higher than last year. Clothing and footwear also rose by 2%, compared to just 0.5% in May.
On a monthly basis, the CPI increased by 0.1%, again matching market forecasts.
So what’s going on?
Why Canada’s Numbers Matter Now
This data is a big deal because it’s the last inflation report before the Bank of Canada announces its next interest rate decision on July 30.
Canada’s central bank aims to keep inflation around 2%, and for the third month in a row, inflation is staying just under that mark. That may sound good, but don’t expect a rate cut just yet.
Last week, Canada also posted a strong jobs report. Together, these signs mean the Bank of Canada probably won’t lower rates this month.
Markets seem to agree. After the inflation report dropped, the chance of a rate cut went down to just 15%.
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What’s Driving the Price Rise?
According to Statistics Canada, durable goods like cars and furniture jumped 2.7% year-on-year. That’s more than the 2% increase seen in May.
Prices for passenger vehicles surged, likely due to global supply chain issues and higher import costs.
Meanwhile, uncertainty in global trade pushed up prices for clothing and footwear. Tariffs have made production more expensive, and it’s showing in stores.
Still, gas prices helped keep overall inflation lower. Gasoline fell by 13.4% in June. That’s because a consumer carbon tax was removed in April, and the base-year comparison effect is still in play.
Core Inflation Is Still Hot
Even with low gas prices, core inflation—the stuff the Bank of Canada really watches—is still above 3%.
- CPI-median, a key core measure, rose to 3.1% in June.
- CPI-trim, which cuts out extreme price changes, stayed at 3%.
Shelter prices, which include rent and mortgage costs, rose 2.9%, the first time in over four years they dropped below 3%.
The Bottom Line
Canada is not seeing runaway inflation, but prices are rising enough to keep interest rates where they are.
For Canadians, that means borrowing costs stay high, and rate cuts aren’t coming soon.
This inflation snapshot tells a bigger story: Canada’s economy is strong—but not cheap.
And that matters. Because in the battle between inflation and your wallet, the Bank of Canada just might sit this one out.
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