Canada’s inflation rate dropped to 2.8% in June despite high grocery prices

Canada’s annual inflation rate fell to 2.8 per cent in June from 3.4 per cent in May. Despite this drop, grocery prices have remained high.

This inflation rate now falls within the Bank of Canada’s target range for the first time in over two years.

Statistics Canada attributed the decline in gasoline prices. However, grocery prices have continued to rise, increasing by 9.1 per cent compared to the previous year and slightly faster than in May.

READ MORE: Canada’s inflation rate dropped to 3.4% in May

The agency says that if mortgage interest costs are excluded, the annual inflation rate would have been two per cent.

The central bank raised interest rates again earlier this month, in part because of concerns that inflation would remain high for longer.

Tuesday’s report indicates that inflation is expected to hover around three per cent over the next year, before slowly decreasing to two per cent by mid-2025.