Canada Inflation


Inflation drops in June

In June, consumer prices decreased a seasonally adjusted 0.4% over the previous month, contrasting the 0.2% monthly price increase in May. As a result, annual headline inflation fell from 3.7% in May to 3.1% in June, coming in below market expectations of a 3.5% increase. Consequently, inflation lies just a notch above the Central Bank's upper band of their 2.0%1% inflation target. Energy prices continued to be the main driver of headline inflation, increasing 15.7% in June (May: +16.6% year-on-year). Inflation excluding energy costs would have been 1.9% in June, which is below the 2.4% increase tallied in May. Annual core inflation, which excludes oil and fresh food prices moderated from 1.8% in May to 1.3% in June. The Bank of Canada expects headline inflation to average 2.5% in 2011 and 2.1% in 2012.


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