Canada’s inflation rate eased to 2.8% in June thanks to lower gas prices

Prices at the pump increased at slower rate on year-over-year basis in June

A person fuels up at a gas station in B.C. on March 13, 2026.

Abby Hughes (new window) · CBC News

Canada's inflation rate eased to 2.8 per cent in June as gas prices decelerated during the month, Statistics Canada data showed Monday.

Higher oil prices due to the war between the U.S. and Iran have sent the cost of gas up in recent months and helped pull the inflation rate higher in May to 3.2 per cent (new window).

The ceasefire and diplomatic talks last month helped ease oil prices, leading to a 10.2 per cent drop in the cost of gas month-over-month.

Since then, tensions have risen after the memorandum of understanding between the countries collapsed, and pump prices have climbed again (new window) as a result.

Statistics Canada says inflation was unchanged from May to June when gas prices are taken out of the equation.

Price hikes at the grocery store also eased to 3.9 per cent in June, down from 4.3 per cent in May.

Costs for fresh fruit grew at a slower pace, according to the data agency, especially for grapes. But prices for some grocery items accelerated — like fresh or frozen chicken, which rose by 5.7 per cent, and bread, rolls and buns, which were up six per cent.

Prices for travel-related expenses also surged as the World Cup kicked off. The cost of traveller accommodation was up around 20 per cent year-over-year in Ontario and British Columbia — mainly in host cities Toronto and Vancouver — last month.

Air transportation costs also rose 9.6 per cent annually due to higher jet fuel prices and increased domestic travel demand, Statistics Canada said, marking the largest increase since February 2023.

BMO Economics managing director Benjamin Reitzes noted that core measures of inflation that strip out more volatile metrics were lower than expected.

"While headline inflation remains above target, underlying pressures are subdued and slowing," Reitzes wrote in a note to investors. Given that, he expects the Bank of Canada to stay "comfortably on the sidelines" for the rest of the year.

Last week, the central bank left its key lending rate unchanged at 2.25 per cent. The central bank signalled at the time that there were few signs that price pressures from the Iran war were spilling over into broader inflation.

Abby Hughes is a writer with CBC News based in Toronto. Originally from Orillia, Ont., she studied journalism at Toronto Metropolitan University. She covers news from the worlds of business, entertainment, health, science and education, and her favourite stories focus on the real people in those areas — the customers, fans, patients, citizens and students. You can reach her with story ideas at abby.hughes@cbc.ca.

With files from the Canadian Press