Canada’s inflation rate slowed more than expected in June from a decade-high in May as food, transport, and clothing costs eased, data showed on Wednesday, but some analysts said it might be only a brief reprieve.
Statistics Canada says part of the reading for June has to do with comparing prices to the lows recorded in the same month last year.
The Consumer Price Index (CPI) rose 3.1% on a year-over-year basis in June, down from a 3.6% gain in May. As a result of price increases in June 2020, base-year effects had a downward impact on consumer inflation, contributing to the slowdown in June 2021. Excluding gasoline, the CPI rose 2.2% year over year, the federal agency said.
The monthly CPI rose 0.3% in June 2021, down from a 0.5% increase in May. On a seasonally adjusted monthly basis, the CPI rose 0.1% in June.
While shelter (+4.4%) and transportation (+5.6%) prices contributed the most to the all-items increase, prices rose at a slower pace in four of the eight major components on a year-over-year basis in June. The headline CPI grew at a slower pace compared with May due in part to a slowdown in price growth for goods. Growth slowed the most in the clothing and footwear component, mostly due to lower prices for women’s clothing.
On a year-over-year basis, gasoline prices rose to a lesser extent in June (+32.0%) than in May (+43.4%) due to a base-year effect. The slower price growth in June stemmed from an increase in June 2020, when gasoline prices partially recovered after falling significantly during the early stages of the pandemic. Gasoline prices rose 10.5% month over month in June 2020, the result of higher demand as businesses gradually reopened.