UPDATE - Canada's annual consumer inflation rises 2.7% in June, slowing from 2.9% in May

ADDS FIGURES, INFORMATION

By Ovunc Kutlu

ISTANBUL (AA) - Annual Canadian consumer inflation came in at 2.7% in June, slowing from a 2.9% year-on-year gain recorded in May, the country’s statistical authority said Tuesday.

The figure, in addition, reflects a significant slowdown since the 8.1% annual gain recorded in June 2022 -- the highest for the consumer price index (CPI) in 39 years.

"The deceleration was largely the result of slower year-over-year growth in gasoline prices, which rose 0.4% in June following a 5.6% increase in May," Statistics Canada said in a statement.

"This monthly decrease coincided with an announcement from the Organization of the Petroleum Exporting Countries and its partners (OPEC+) to gradually phase out voluntary production cuts later this year and the restart of production for some refineries following shutdowns for spring maintenance," it added. The consumer price index fell 0.1% in June, following a 0.6% increase in May.

The expectation for the figure was to show a monthly increase of 0.1%.

The monthly decrease was driven by lower prices for travel tours, which plummeted 11.1% and gasoline with a decline of 3.1%, according to the agency.

Statistics Canada said durable goods prices continued to decline annually in June with a decline of 1.8%, following a year-on-year decrease of 0.8% in May.

"The purchase of passenger vehicles index contributed the most to the decrease, falling 0.4% year over year in June, the largest yearly decline since February 2015," it said.

Furniture prices, in addition, fell annually by 3.9% in June, partly attributable to the easing of supply chain issues, according to the agency.

"Higher interest rates are also impacting the spending patterns of consumers, with many spending less on discretionary goods by delaying big-ticket purchases, which may be contributing to lower demand and therefore lower prices," it explained.

The Bank of Canada on June 5 reduced the policy rate by 25 basis points, its first rate cut in more than four years. The target for the overnight rate was lowered to 4.75%, with the bank rate at 5% and the deposit rate at 4.75%.

The move was the first rate cut by the central bank since March 2020, when it lowered the policy rate 25 basis points in response to economic conditions caused by the coronavirus pandemic.

Its next monetary policy meeting will conclude July 24.