FX.co ★ Canada Inflation Rate Rises as Expected

In June 2025, Canada's annual inflation rate increased to 1.9% from 1.7% the previous month, meeting market expectations. Despite this rise, the rate remained below the Bank of Canada's midpoint target of 2% for the third consecutive month. This outcome aligns with the central bank's forecast, suggesting that inflation could rise slightly amid potential tariff impacts and supply chain disruptions that might cause material shortages. The deflation rate for fuel decreased significantly to -13.4% compared to -15.5% in May, mainly due to base effects, which also influenced overall transportation costs, now at -0.6% compared to -1.4%. Inflationary pressures were evident in durable goods, with passenger vehicle prices increasing to 5.2% from 4.9% and furniture prices rising to 3.3% from 0.1%. Conversely, inflation eased in the food sector, with growth slowing to 2.9% from 3.4%, and in the shelter category, reducing to 2.9% from 3%. The trimmed-mean core CPI, which the Bank of Canada primarily uses to assess underlying inflation, remained steady at 3%, as anticipated.