Lower gas prices were the major force pulling the headline inflation rate down in June ’26. Economists weighing in on the latest price data on Monday, 20 July ’26, found even more encouraging signs under the hood of Statistics Canada’s report.
Inflation slowed to 2.8% in June, said StatCan. This is down from the recent high of 3.2%, which was reflected a month before in May. It’s a tick lower than most economists were expecting.
The agency pointed to a 10% drop in the cost of gasoline month-over-month to rationalise the decline.
Gas prices surged over the spring, mostly due to the Middle East conflict. A tentative peace agreement between the U.S. & Iran took pressure off global oil prices over the course of June.
Some consumers may view easing in the headline inflation rate as old news. This is because renewed hostilities between the nations have pushed prices at the pump higher again in recent weeks.
RBC assistant chief economist Nathan Jansen said that energy prices were still significantly higher than a year back in June. They have moved higher since tensions re-escalated in the Middle East.
StatCan reported that inflation remained stable at 2.2% in May, excluding gas prices.
The Bank of Canada has retained its benchmark interest rate on hold all year. This is as it waits to see whether the energy price spike from the Iran war is filtering into other parts of the consumer basket.
StatCan data reflect the average of the central bank’s preferred metrics of core inflation eased alongside the headline rate in June. It fell below the 2% target for the 1st time in nearly 6 years back in December ’20.
Janzen said that monthly inflation data may be volatile, but that dip may be meaningful. He added that the June inflation data reinforces what the central bank said at its rate decision the last week. Any spillover from higher gas prices So far, higher gas prices have had limited spillover effects..
