By Promit Mukherjee
OTTAWA, July 20 (Reuters) – Canada’s annual inflation rate cooled more than expected to 2.8% in June, data showed on Monday, as gasoline costs fell sharply after the U.S. and Iran signed their memorandum of understanding to end the war.
The war has since then flared up again in the Middle East and gasoline costs have started inching up.
The Consumer Price Index on a month on month basis decelerated by 0.4%, Statistics Canada said.
– Analysts polled by Reuters had forecast an annual inflation rate of 2.9% and a monthly inflation rate of -0.2% in June.
– Last month, the consumer price index had clocked a 29-month high of 3.2%, breaching the Bank of Canada’s control range of 3% in more than two years.
– Gasoline prices were the biggest contributor to the easing in inflation rate with price of the fuel purchased at the pump falling by over 10% in June, StatsCan said. On a year over year basis, gasoline costs rose at a rate of 20.5% in June, down from a rise of 33.2% in the prior month.
– Excluding gasoline, the CPI was unchanged in June compared with May, at 2.2%, StatsCan said.
– Due to a continued increase in gasoline prices, transportation costs, which accounts for around 18% of the CPI basket, rose by 6.7% in June on an annual basis.
– Other items in the basket that grew at more than 3% were food, which rose by 3.5% in June, and the recreation, education and reading category, which increased by 3.8%, data showed.
– However, the rise in grocery prices cooled slightly with the cost of food purchased from stores rising by 3.9% on an annual basis last month, down from 4.3% in May. June was the 17th consecutive month that grocery price inflation outpaced the all-items CPI.
– The core measures of inflation, closely watched by the BoC to gauge underlying inflation trends, eased further in June. CPI-median was down to 1.9% from 2.1% in May, while CPI-trim fell to 1.8% from 2% in the prior month.
– The Canadian dollar slid 0.18% to C$1.4045 to the U.S. dollar, or 71.20 U.S. cents.
(Reporting by Promit Mukherjee; Editing by Dale Smith and Nick Zieminski)
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