FX.co ★ Canada Inflation Slows More than Expected

Canada’s headline inflation rate eased to 2.8% in June 2026, down from a more than two-year high of 3.2% in May and coming in just below market expectations of 2.9%. The deceleration was largely driven by a slower rise in gasoline prices (20.5% year-over-year versus 33.2% in May), which helped pull back overall transportation inflation (6.7% versus 9.0%). This easing reflected a temporary resumption of energy exports from the Middle East, which reduced wholesale fuel prices.

Food inflation also moderated, with prices rising 3.5% compared with 3.8% previously, as grocery store inflation softened. At the same time, two key measures of underlying inflation watched by the Bank of Canada—the median core rate (1.9% versus 2.1%) and the trimmed-mean rate (1.8% versus 2.0%)—fell more than anticipated, reaching their lowest levels in more than five years.

Inflation slowed for shelter (1.5% versus 1.7%) and for health and personal care (2.5% versus 2.7%), while prices for household operations, furnishings, and equipment continued to decline (-0.2%, unchanged from the previous month). On a monthly basis, the CPI fell 0.4%, driven largely by a 10.2% drop in gasoline prices.