Inflation cools to 2.7% in June, but grocery prices heating up again – National

Statistics Canada says the annual rate of inflation slowed in June, but renewed pressures are showing up at the grocery store.

The agency’s consumer price index (CPI) reported an annual inflation rate of 2.7 per cent in June. That follows an uptick to 2.9 per cent in May.

Relief in gasoline prices were cited as the main reason for the annual decline. Gas prices were down 3.1 per cent month-to-month, the second consecutive month of lower prices at the pump.

Prices for travel tours were also down 11.1 per cent on a monthly basis, while cellular service costs fell 12.8 per cent annually.

Many durable goods saw outright price declines in the annual CPI, StatCan noted.

Passenger vehicle prices were down 0.4 per cent year-over-year, marking the largest annual decline since February 2015. Used vehicles in particular drove the cooling in this segment, with improved inventory levels driving down prices 4.5 per cent year-over-year following a rapid run-up during the COVID-19 pandemic.

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Easing supply chains also helped the price of furniture fall 3.9 per cent annually in June, StatCan said. The agency also pointed to higher interest rates reining in consumer spending, with dwindling demand potentially driving prices lower.

But the pace of price hikes at the grocery store picked up for the second month in a row, rising 2.1 per cent year-over-year. On a three-year basis, grocery prices are up 21.9 per cent.

Price hikes were accelerating for dairy products (up 2.0 per cent), fresh vegetables (up 3.8 per cent) and non-alcoholic beverages (up 5.6 per cent), as well as preserved fruit and fruit preparations (up 9.5 per cent). Shoppers looking to save money on fruit might’ve gone to the fresh section, however, where prices were down 5.2 per cent annually.

Shelter prices were also up 6.2 per cent year-over-year, but this represents a step down from 6.4 per cent in the month before.

The Bank of Canada will be closely scrutinizing June inflation figures as the central bank prepares for its next interest rate decision on July 24.

More to come…

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