Canada's inflation rate eased to 2.8% in June thanks to lower gas prices
Canada's inflation rate dropped to 2.8% in June, largely driven by a temporary decrease in gasoline prices. However, rising geopolitical tensions and increased demand for certain food items continue to exert pressure on consumer costs.
Why it matters
Inflation data is a critical indicator for central bank policy and household purchasing power in the Canadian economy.
Higher oil prices due to the war between the U.S. and Iran have sent the cost of gas up in recent months and helped pull the inflation rate higher in May to 3.2 per cent .
The ceasefire and diplomatic talks last month helped ease oil prices, leading to a 10.2 per cent drop in the cost of gas month-over-month.
Since then, tensions have risen after the memorandum of understanding between the countries collapsed, and pump prices have climbed again as a result. At the same time, Ukrainian strikes on Russian oil infrastructure have also put pressure on the supply of refined oil products including fuel, according to Joe Calnan, vice president of energy at the Canadian Global Affairs Institute.
Statistics Canada says inflation was unchanged from May to June when gas prices are taken out of the equation.
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