Inflation rate rose slightly to 1.9% in June as vehicle and clothing prices climb

The pace of inflation sped up to 1.9 per cent in the month of June as costs for cars and clothes increased, Statistics Canada said Tuesday.

Passenger vehicles prices rose significantly in June — rising 4.1 per cent year over year, compared to a 3.2 per cent increase in May. Used passenger vehicles had their first year-over-year increase in 18 months, according to Statistics Canada. New cars also increased in price, with the inflation rate climbing to 5.2 per cent in May.

Costs for clothing and footwear accelerated last month, rising two per cent year over year in June. Statistics Canada says that came as a result of tariff uncertainty hitting the clothing industry in particular.

And in the grocery aisle, prices rose 2.8 per cent, after rising 3.3 per cent the month prior. Price growth in that category slowed in large part due to price decreases for fresh fruits and vegetables — the first decline in that category since October 2021, says the data agency.

Statistics Canada said gasoline prices were nearly unchanged in June as higher crude oil prices and geopolitical conflicts ratcheted up pressure at the pumps.

The new numbers come after the agency said the pace of inflation held steady in May at 1.7 per cent.

The headline inflation figure is in line with what economists were expecting — in a poll by Reuters ahead of the release, economists predicted the annual pace of inflation would rise to 1.9 per cent for the month.

Doug Porter, chief economist at BMO Financial Group, said that inflation showed no real improvement in June, in part because pressures of the trade war pushed some prices up. The high cost of housing is also a contributing factor that's keeping inflation up, Porter says.

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Inflation rose slightly in June to 1.9%, Statistics Canada says

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The pace of inflation sped up slightly in Canada to 1.9 per cent in the month of June, Statistics Canada said Tuesday. This comes after Statistics Canada said the pace of inflation held steady in May at 1.7 per cent.

As a result, Porter says it's unlikely the Bank of Canada will cut interest rates later this month.

The central bank is "not gonna be really comfortable cutting interest rates when underlying inflation is stuck right at the high end of their comfort zone," Porter told CBC News. The bank aims to keep inflation close to two per cent.

Porter said it's possible it could cut rates in September, but only with a better inflation number.

South of the border, inflation was also on the rise — consumer prices rose 2.7 per cent in June from a year earlier, up from an annual increase of 2.4 per cent in May, according to the U.S. Department of Labour.

The uptick there was driven by a range of higher prices. The cost of gas rose one per cent just from May to June, while grocery prices increased 0.35. Appliance prices jumped for the third straight month.