Canada’s annual inflation rate accelerated to 8.1% in June, missing forecasts but remaining at its highest level since January 1983, mainly on rising gasoline prices, Statistics Canada data showed. Analyst surveyed by Reuters had expected the annual inflation rate to hit 8.4% in June, up from 7.7% in May. The Bank of Canada last week said it expected inflation to remain around 8% for the next few months.
The acceleration in June was mainly due to higher prices for gasoline; however, price increases remained broad-based with seven of eight major components rising by 3% or more,” Statscan said. On a month-over-month basis, the index rose 0.7% in June, missing forecasts of 0.9% and down from 1.4% in May.
Canada’s inflation rate has been above the Bank of Canada’s 2% target since March 2021. The central bank last week surprised with a rare 100-basis-point rate increase in a bid to crush inflation and fend off the risk of a price spiral.
Gasoline prices were up 54.6% in June on a year-over-year basis, compared with 48.0% gain in May. High gasoline prices account for about a quarter of total price gains from a year-ago.