Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.8 per cent on a year-over-year basis in June, following a 3.2 per cent increase in May. On a seasonally adjusted monthly basis, the CPI was down 0.1 per cent in June, equivalent to a 1.4 per cent decrease on an annualized basis. The CPI ex-gasoline increased by 2.2 per cent in June, unchanged from the previous month. Additionally, food prices overall increased by 3.5 per cent year-over-year, down from 3.8 per cent in May. In BC, consumer prices rose 2.8 per cent year-over-year in June, down from 2.9 per cent the month prior. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, increased by 1.9 per cent and 1.8 per cent year-over-year, each down 0.2 points from May.
 
The deceleration in June’s CPI print is driven by slower annual increases in gasoline prices compared to May, as oil prices eased on hopes of a sustained ceasefire in the Iran War. Looking at major components, food purchased from stores cooled to 3.9 per cent, down 0.4 points from May. Also, shelter prices rose 1.5 per cent year-over-year, approaching their lowest rate of inflation in the past 5 years. Moreover, 3-month annualized core inflation cooled to roughly 1.6 per cent, dropping below the Bank of Canada’s desired 2 per cent target. Taken together, we largely expect the Bank to hold its policy rate through 2026 as it continues looking through the oil price shock while hoping for a resurgence in the Canadian economy in the second quarter.