In June, the annual rate of inflation dropped to 2.8%, a significant achievement in the Bank of Canada's battle against increasing pricing pressures.
The price slowdown, according to Statistics Canada, was "broad-based" but was mostly caused by lower gas prices than at the same time last year. The cost of groceries is continuing to rise rapidly in Canada, with prices climbing 9.1% yearly in June.
One year after annual price pressures peaked at 8.1% in June 2022, the most recent inflation reading was released. In May, the inflation rate in Canada was 3.4%.
Although the Bank of Canada's officials have made it plain they would retain pressure on prices until inflation drops back to 2%, the target range for inflation is one to three percent.
Early this month, the central bank increased interest rates, in part due to worries that inflation would continue to remain high.
Through increased mortgage interest rates, the Bank of Canada's rate increases are also contributing to greater inflation.
According to the federal agency, inflation would have increased by 2% annually if mortgage interest payments had been excluded.
The Canadian central bank anticipates that the country's inflation rate would remain around 3% for the upcoming year before gradually falling to the objective of 2% by mid-2025.
Learn about the Inflation Control Target Set by the Bank of Canada
The Bank of Canada and the Canadian government approved the inflation-control target in 1991. Since then, it has been reaffirmed multiple times, most recently in October 2016 for the five years ending in 2021. The target intends to maintain total CPI inflation over the medium term at the midpoint of a target range of 1% to 3%, or 2%. In order to attain the target normally within a time frame of six to eight quarters—the period of time it typically takes for policy actions to propagate through the economy and fully impact inflation—the Bank adjusts its policy interest rate upwards or downwards as necessary.
sources:
https://globalnews.ca/news/9838996/canada-inflation-june-2023/