Inflation declines to lowest level since March 2021 in June

Inflation dropped to 2.7% in June, which followed May’s 2.9% and undershot market expectations. June's figure represented the lowest inflation rate since March 2021 and was within the Central Bank’s 1.0%–3.0% target range. The result was primarily driven by softer growth in prices for housing, transportation, and recreation and culture. Annual average inflation was unchanged at May's 3.1% in June. Meanwhile, core inflation rose to 1.9% in June from the previous month's 1.8%. Finally, consumer prices fell 0.06% from the previous month in June, contrasting May's 0.56% rise. June's result marked the weakest reading since December 2023.

On the monetary policy implications, TD Economics’ James Orlando said:s “[The June inflation] report has increased odds of back-to-back rate cuts. Recent data have supported a cut, with the job market loosening and wage gains decelerating from elevated levels.”

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