Canadian inflation eased annually in June, led by lower gasoline prices, while underlying price pressures remained contained despite temporary FIFA World Cup-related effects, according to CIBC Economics after Monday's release of the consumer price index data.
Annual inflation eased to 2.8% in June from 3.2% in May, slightly below the 2.9% consensus forecast, said CIBC. Excluding gasoline, CPI inflation was unchanged at 2.2% year over year.
Core inflation excluding food and energy rose to 1.8% annually from 1.6%. However, the increase was largely driven by temporary factors, including higher traveller accommodation costs linked to FIFA World Cup-related demand, added CIBC.
Measures of underlying inflation looked at particularly by the Bank of Canada, including CPI-Trim and CPI-Median, were softer than expected, indicating that underlying price pressures remain contained, wrote Andrew Grantham of CIBC.
As a result, the BoC is predicted to keep its policy rate unchanged for the remainder of the year, said the bank.