In June, inflation accelerated to 1.9 percent as prices for cars and clothing surged, according to Statistics Canada. Passenger vehicle prices notably rose by 4.1 percent year over year, up from a 3.2 percent increase in May. Used passenger vehicles saw their first year-over-year increase in 18 months. New car prices also went up, pushing the inflation rate to 5.2 percent in May.
Costs for clothing and footwear saw a two percent increase year over year in June, attributed to tariff uncertainty impacting the clothing sector. Grocery prices rose by 2.8 percent after a 3.3 percent increase the previous month, mainly due to lower prices for fresh fruits and vegetables, marking the first decline in that category since October 2021.
Gasoline prices remained nearly unchanged in June as higher crude oil prices and geopolitical tensions impacted the market. These new inflation figures follow May’s steady rate of 1.7 percent.
Economists had anticipated the annual inflation rate to reach 1.9 percent for June, aligning with the actual data. Doug Porter, chief economist at BMO Financial Group, stated that inflation did not show significant improvement in June, partly due to trade war pressures affecting prices. He also highlighted the high housing costs contributing to the sustained inflation levels.
As a result, Porter suggested that the Bank of Canada is unlikely to reduce interest rates this month. The central bank aims to maintain inflation close to two percent, and any rate cuts would depend on future inflation data, possibly in September.
In the United States, inflation also increased, with consumer prices rising by 2.7 percent in June compared to a year earlier, up from a 2.4 percent annual increase in May. The rise was driven by various factors, including a one percent increase in gas prices from May to June and a 0.35 percent increase in grocery prices. Appliance prices surged for the third consecutive month.
