Canada’s inflation rate tumbles to 2.8 per cent

Canada’s inflation rate tumbles to 2.8 per cent

Canada’s inflation rate has fallen back to the country’s target range for the first time in more than two years, but economists say the fight against high inflation is far from over.

Annual inflation tumbled to 2.8 per cent in June, Statistics Canada reported Tuesday. The deceleration was broad-based, though lower gasoline prices compared with last year led the slowdown.

But Canadians continue to pay substantially higher prices for groceries, as prices rose 9.1 per cent year-over-year, slightly faster than in May.

The annual inflation rate was 3.4 per cent in May. The last time it fell below three per cent was March 2021.

The central bank’s aggressive rates hikes are intended to choke off demand in the economy by making it more expensive for consumers and businesses to borrow.

The federal agency says the annual inflation rate would have been two percent when mortgage costs are excluded.

Mortgage interest costs were up more than 30 per cent from June 2022.

Tuesday’s report shows prices for a range of goods and services are moderating, serving as good news for consumers who have been facing steep price increases since the pandemic.