Inflation cools to 2.8% in June, but food and mortgage costs up sharply

financialpost.com:

The rise in consumer prices decelerated again in June, but costs for shelter and food are still putting a strain on Canadians’ wallets, evidence that bringing inflation down to target remains a tricky balancing act for the Bank of Canada.

The consumer price index (CPI) was up 2.8 per cent last month, Statistics Canada reported on July 18, falling a couple ticks below the three per cent increase economists surveyed by Bloomberg had expected. That was down from 3.4 per cent in May and marked the first time the inflation rate has fallen within the central bank’s target control range of one to three per cent since March 2021.

The decline was driven by a 21 per cent drop in gasoline prices for the month, which was largely the result of base-year effects; last year, prices at the pump shot up amid increasing global demand for crude oil.

In June 2022, inflation hit its peak above eight per cent and has come down as the central bank hiked interest rates at almost every policy meeting since March last year — taking a brief pause in March and April this year.

“Inflation has fallen into the Bank of Canada’s target range, but there are signs pointing to slower progress from this point on,” Royce Mendes, economist and managing director at Desjardins Capital Markets, wrote to clients in a note July 18.

Discounting gasoline, the headline inflation figure would have been four per cent in June, down from 4.4 per cent in May. Statistics Canada said elevated grocery prices, up 9.1 per cent, and mortgage interest costs, up 30.1 per cent, contributed the most to the overall increase of 2.8 per cent.

Canadians paid 14.7 per cent less for cellular services, which had dropped 8.2 per cent in May. Cellphone bills, meanwhile, were down 7.6 per