Consumers paid less for gas at the pump in June compared to May, and that helped cool annual inflation to 2.8 per cent, according to Statistics Canada.
The agency released the latest Consumer Price Index (CPI) Monday, which is the main gauge on inflation for Canadian consumers. The headline inflation figure was down from May’s year-over-year reading of 3.2 per cent.
Gas prices surged over the spring mostly because of conflict in the Middle East, but a tentative peace agreement between the United States and Iran took pressure off global oil prices over the course of June. Renewed hostilities between the nations have pushed prices at the pump higher again in recent weeks.
Taking gas prices out of the equation, Statistics Canada said inflation was unchanged at 2.2 per cent from May to June.
Price hikes at the grocery store also eased to 3.9 per cent in June, down from 4.3 per cent in May.
June also marked the 17th straight month that grocery price inflation increased more than the headline inflation reading.
Consumers saw prices for fresh fruit rise at a slower pace in June, driven by lower costs for grapes, the CPI report said. But price hikes accelerated for fresh or frozen chicken, some bakery goods and items from the freezer section, offsetting those slowdowns.
FIFA World Cup games in Toronto and Vancouver, meanwhile, saw costs for travel-related services like accommodation and rental cars surge in June. The cost of traveller accommodation was up around 20 per cent year-over-year in Ontario and British Columbia last month.
Air transportation costs also jumped 9.6 per cent annually, marking the biggest increase in more than three years. Statistics Canada said higher jet fuel costs and stronger demand for domestic travel drove the increase.
The Bank of Canada has kept its key interest rate steady at 2.25 per cent for six straight meetings as it seeks to keep the CPI within a target range of one and three per cent for year-over-year inflation.
At last week’s rate announcement, the central bank signaled that there were few signs that price pressures from the Iran war were spilling over into broader inflation.
– with files from The Canadian Press
Based on reporting by Global News.