Canada’s inflation rate increased in June, but not enough to raise major concerns from the Bank of Canada. While prices are trending upward in certain areas, overall inflation remains under control and below the central bank’s target. This latest update comes just ahead of the Bank’s next interest rate decision, and it offers limited pressure for any immediate changes.
📈 What the Numbers Say
According to Statistics Canada, the Consumer Price Index (CPI) rose 1.9% in June compared to the same time last year. That matches what economists had predicted and follows a 1.7% increase in May. This also marks the third straight month inflation has stayed under the Bank of Canada’s 2% target.
Source: Statistics Canada, Chart 1: The 12-month change in the Consumer Price Index (CPI) and CPI excluding energy. July 15, 2025.
🚗 What’s Getting More Expensive
- Durable goods like vehicles and furniture saw faster price increases.
- Used vehicle prices went up for the first time in 18 months, largely due to limited inventory.
- Clothing and footwear also became more expensive, partly due to international trade uncertainty and rising production costs.
- While gas prices continued to decline, the drop was smaller than in previous months.
- Grocery prices rose at a slower pace, thanks to a decrease in the cost of fresh vegetables such as onions and cucumbers.
📊 Core Inflation & What the Bank of Canada Is Watching
When energy prices are excluded, inflation stood at 2.7%.
The traditional core inflation measure, which strips out volatile food and energy costs, held steady at 2.6%. The Bank of Canada’s preferred inflation indicators, the trimmed mean and weighted median, remained mostly unchanged, averaging 3.05% in June.
Source: Statistics Canada, Chart 1: The 12-month change in the Consumer Price Index (CPI) and CPI excluding energy. July 15, 2025.
🏦 What This Means for the Bank of Canada
These results provide no strong signal for the Bank of Canada to change course at its next rate decision on July 30. With trade tensions between Canada and the U.S. still playing out, the central bank is staying cautious. Rather than making bold forecasts, it is using different inflation scenarios to guide its decisions.
📦 What to Watch Next
Although many businesses are already facing higher costs from supply chain changes and tariffs, those increases have not fully reached consumers just yet. Economists believe we could start seeing the real impact on prices in the coming months.
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