B.C.’s inflation rate took a slight turn downwards in June.
The annual rate of inflation ticked down by 0.3 percentage points between May and June to land at 2.6 per cent, according to data released Tuesday by Statistics Canada.
Inflation on the West Coast still measured below the national average of 2.7 per cent, which fell 0.2 percentage points month to month.
The latest numbers will likely bend the Bank of Canada towards cutting its overnight rate to 4.5 per cent in late July, according to economist Benjamin Reitzes, BMO’s managing director of Canadian rates.
“The details of the report are consistent with the backdrop of consumers becoming increasingly cautious with discretionary spending,” he said in a note, adding spending was particular soft with recreation and clothing.
Grocery prices rose 2.1 per cent year-over-year in June, up from May when they increased 1.5 per cent from the same month a year earlier.
It marked the second consecutive month that the pace of growth in grocery prices accelerated.
Fresh vegetables saw a 3.8 per cent gain and dairy product prices grew two per cent. The price of preserved fruit and fruit preparations grew 9.5 per cent, while non-alcoholic beverage costs rose 5.6 per cent.
Fresh fruit prices helped moderate the increase in overall grocery prices, falling 5.2 per cent in June compared with a 2.8 per cent drop in May.
Despite describing the latest figures as a "mixed bag," TD senior economist James Orlando echoed Reitzes’ sentiments about what it means for the Bank of Canada.
“While headline inflation got back on track in June, the three-month annualized pace of core inflation has now been rising for three straight months. This infers that the annual pace of inflation should remain in the upper end of the BoC's one to three per cent range over the coming months," he said in a note. "The BoC is in a cutting cycle. Whether or not it follows through with a slightly quicker pace of cuts next week, Canadians should expect rates to be steadily reduced over the rest of this year and next."
The June inflation reading is the last before the Bank of Canada's next interest rate decision, set for July 24. The central bank, which targets an annual inflation rate of two per cent, cut its benchmark interest rate by a quarter of a percentage point earlier this month to 4.75 per cent.
–With files from the Canadian Press
Editor's note: An earlier version of this story stated B.C.'s inflation rate rose by 0.1 percentage points between May and June, when in fact it fell by 0.3 percentage points. We regret this error.
