The Canada’s inflation rate over one year rose to 1.9 % in June compared to the previous month, due to the increase in price vehicles and clothing, according to the National Statistics Agency on Tuesday.
In May, inflation over one year remained stable at 1.7 %.
The prices of motor vehicles displayed an increase of 4.1 % from one year to the next in June after having increased by 3.2 % in May.
The prices of clothing and shoes have increased by 2.0 % over a year in June after an increase of 0.5 % in May, “the industry having been faced with higher costs arising from customs duties”, said Statistics Canada.
In addition, the agency stresses that the drop in petrol prices in June was less rapid than the previous month, which “exerts upward pressure” on inflation.
“The healthy growth in basic inflation measures, coupled with the surprisingly robust gains last week in terms of employment, now makes a reduction in Canada Banque rates in July,” said Andrew Hencic, analyst for TD Economics in a note.
The central bank has regularly lowered its key rate in recent months before taking a 2.75 %break, saying that it needed more time to assess the impact of a trade war with the United States on the Canadian economy.
That said, “we are still expecting the slowdown in population growth, the renewal of mortgage loans and the weakness of business investments bringing the central bank to resume its rate reduction cycle in September”, underlines Royce Mendes, analyst for Desjardins Bank.
The Central Bank of Canada must announce its next monetary decision at the end of July.
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