(Bloomberg) — Inflation decelerated in Canada as rising gasoline costs eased and some food prices fell, but price pressures in the country continue to run at some of the hottest levels in nearly a decade.
The consumer price index was up 3.1% from a year earlier, Statistics Canada reported Wednesday in Ottawa, broadly in line with the 3.2% increase economists were predicting in a Bloomberg survey.
While a slowdown from the 3.6% gain in May, the reading exceeds the Bank of Canada’s 1% to 3% control range for inflation. On a monthly basis, prices rose 0.3% versus an estimate of 0.4%.
The average of core inflation measures — often seen as better gauge of underlying price pressures — was 2.23%, little changed from May.
June’s inflation rate was largely driven by higher transportation and housing costs. While the Bank of Canada maintains the recent run-up in prices is transitory, policy makers now expect inflation to creep to an average of 3.9% in the third quarter, some of the strongest pressures seen since the early 2000s.
Supply-chain bottlenecks are also pushing up prices for hard goods likes cars and household appliances, which have been affected by a global shortage in semiconductor chips.
Policy makers led by Governor Tiff Macklem see supply chain woes easing in coming months. But with widespread reopenings taking place across Canada as vaccination rates increase, analysts say there is a risk inflation could be more broad-based and persistent because of strong demand.
The June data also reflect a new basket weight of goods that Statistics Canada implemented to account for changing consumption preferences during the pandemic.
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