Here’s what economists say about June’s inflation print
Andrew Grantham, senior economist at CIBC in Toronto, attributed the modest acceleration in core inflation excluding food and energy, which reached 1.8% annually, partly to World Cup demand.
“We continue to see the Bank of Canada holding its overnight rate steady for the remainder of this year,” Grantham wrote, “even if headline inflation reaccelerates slightly in the months ahead due to the recent move in global oil prices.”
He added that the temporary increases in travel-related categories linked to the World Cup were expected to fade in late summer and early fall.
Core pressure retreats to a five-year low
The more consequential signal for the BoC’s policy stance came in the preferred core measures. CPI-Trim and CPI-Median averaged 1.9% in June, down from 2.1% in May, and both fell below 2% for the first time since August 2020.
Preston was direct about the takeaway for the central bank: “June’s inflation report reinforces our view that the Bank of Canada can remain on the sidelines for quite some time,” she wrote, adding that “inflation remains very benign in Canada, as a relatively soft demand backdrop leans against sellers raising prices.”
