OTTAWA — The annual pace of inflation accelerated to 1.9 per cent in June as consumers were paying more at car dealerships, Statistics Canada said Tuesday.
The June price hike is up from 1.7 per cent in May and was largely in line with economists’ expectations.
StatCan said gasoline prices were nearly unchanged in June as higher crude oil prices and geopolitical conflicts ratcheted up pressure at the pumps. Motorists saw a steeper monthly decline in prices this time last year, which the agency said led to a rise in headline inflation.
Excluding energy, annual inflation was 2.7 per cent in June. The removal of the consumer carbon price at the start of April continues to dampen the annual price comparisons.
Food inflation cooled somewhat to 2.9 per cent in June, down from 3.4 per cent in May. StatCan pointed to lower costs for fresh vegetables as driving down inflation at the grocery store.
Shelter inflation also continued to ease, dropping a tenth of a percentage point to 2.9 per cent year-over-year in June.
But StatCan said price hikes for passenger vehicles accelerated to 4.1 per cent in June from 3.2 per cent the month previous. Used car prices increased annually for the first time in 18 months thanks to tighter inventories.
Furniture prices were also rising faster in June as part of broader acceleration from durable goods in StatCan’s consumer basket.
The June figures mark the final look the Bank of Canada will get at price data before its next interest rate decision on July 30.
The central bank’s preferred core measures of inflation showed no signs of easing in June, remaining around three per cent.
The latest inflation figures come a few days after StatCan reported an unexpected gain of 83,000 jobs in June, enough to push the unemployment rate down a tick to 6.9 per cent.
TD Bank senior economist Andrew Hencic said in a note to clients Tuesday that the June inflation report is another notch in the column for a rate hold later this month.
"Healthy core price growth, coupled with last week's surprisingly robust employment gains now make a July cut from the Bank of Canada unlikely," he said.
Financial market odds of a quarter-point cut later this month fell below 10 per cent after the inflation report, according to LSEG Data & Analytics, from just over 13 per cent before the release.
Hencic said renewed trade threats — U.S. President Donald Trump said last week he'll hit Canada with a 35 per cent tariff starting Aug. 1 — could give the central bank more runway to cut interest rates in the months ahead if the economy starts to weaken further.
CIBC senior economist Ali Jaffery also said in a note that he sees the Bank of Canada holding rates steady later this month.
"Waiting until the fall will give them more time to observe cost pressures, the response of the economy to tariffs and the uncertainty shock, and perhaps most important, to have a clearer picture of Canada’s tariff outcome," he said.
This report by The Canadian Press was first published July 15, 2025.
Craig Lord, The Canadian Press
