Date Published: July 15, 2025
Canadian prices, as measured by the Consumer Price Index (CPI), rose 1.9 per cent on a year-over-year basis in June, up from a 1.7 per cent increase in May. Month-over-month, on a seasonally adjusted basis, the CPI was up 0.2 per cent in June.
Upward pressure on headline inflation was largely driven by a slower fall in gasoline prices year-over-year compared to May, along with higher price growth for durable goods (2.7 per cent). Additionally, shelter price growth continues to cool, with prices growing by 2.9 per cent in June, slightly down from 3.0 per cent in May.
Furthermore, the CPI excluding energy rose by 2.7 per cent in June. Food purchased in grocery stores rose at a slower pace of 2.8 per cent year-over-year compared to 3.3 per cent the previous month. In British Columbia, consumer prices rose 2.1 per cent year-over-year in June, down from 2.3 per cent in May.
The Bank of Canada's preferred measures of inflation—median and trimmed CPI, which strip out volatile components—are currently at 3.1 per cent and 3.0 per cent year-over-year, respectively.
Outlook and Policy Implications
June's CPI report illustrates ongoing upward pressure on prices despite monthly fluctuations in headline inflation. The Bank of Canada's core measures of inflation remain at the upper end—and even outside—of their target range, likely due to the price impacts of tariffs on major Canadian industries.
Moreover, Canada remains vulnerable to further price acceleration with renewed tariff threats from the United States. Taken together, this report favours a rate hold from the Bank during its July meeting, as they have repeatedly signalled hesitancy to enact policy that may accelerate inflation beyond neutral levels amidst immense uncertainty concerning trade policy.
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