Canada Inflation Cools Sharply as Gasoline Pulls CPI Below Expectations

Canada's annual inflation rate slowed more than expected to 2.8% in June from 3.2% in May. Headline CPI fell 0.4% on the month, the largest decline since December 2024. The drop was driven by gasoline prices, which fell 10.2% month-on-month. Though gasoline remained elevated from a year earlier, the annual pace slowed sharply from May as oil prices eased.

Underlying inflation also softened. CPI Median eased to 1.9% year-on-year from 2.1%. CPI Trimmed slowed to 1.8% from 2.0%. Both undershot market expectations. Common CPI edged down to 2.6% from 2.7%, slightly above consensus. Excluding gasoline, headline CPI held at 2.2% year-on-year, unchanged from May.

The Bank of Canada next meets in September.