Canada’s Inflation Ticks Up to 1.9% in June as Clothing and Car Prices Climb

Canada’s annual inflation rate rose to 1.9% in June, up from 1.7% in May, largely due to rising prices for clothing and vehicles, according to Statistics Canada.

The cost of passenger cars jumped 4.1% year-over-year in June, compared to a 3.2% increase in May. Used car prices also saw their first year-over-year gain in 18 months, while new vehicle prices surged 5.2%.

Clothing and footwear prices increased by 2% year-over-year, a spike partly attributed to the impact of tariffs affecting the apparel industry.

Meanwhile, grocery prices rose by 2.8%, a slight slowdown from May’s 3.3% increase. The deceleration was driven by a rare decline in fresh fruits and vegetables, marking the first drop in that category since October 2021.

Gasoline prices remained relatively flat in June, as higher crude oil prices and geopolitical tensions offset potential declines at the pump.

The latest inflation numbers come just weeks after the agency reported a steady inflation rate of 1.7% in May. The 1.9% figure aligns with economist forecasts, including those from a Reuters poll, which anticipated the same jump.

According to Douglas Porter, Chief Economist at BMO Financial Group, there’s been “no real progress” on curbing inflation in June. He cited global trade pressures as a contributing factor to rising prices.

As a result, Porter suggests it’s unlikely that the Bank of Canada will cut interest rates at the end of July. He believes that a significant drop in inflation would be needed before any potential rate cuts in September.

South of the border, the U.S. also reported rising inflation, with consumer prices increasing 2.7% year-over-year in June, compared to 2.4% in May. That rise was fueled by higher costs in gasoline, groceries, and appliances, the latter of which have seen price hikes for three straight months.