Statistics Canada revealed today that Canada's inflation rate dropped to 2.8 percent in June, placing it within the Bank of Canada's target range for the first time in over two years.
Statistics Canada's Consumer Price Index report states that the deceleration was widespread, with the significant decrease in gasoline prices compared to the previous year being the main driver of the slowdown.
However, Canadians continue to face substantially higher food prices, as they increased by 9.1 percent year over year, slightly faster than in May.
The annual inflation rate was 3.4 percent in May. The last time it fell below three percent was in March 2021.
Earlier this month, the Bank of Canada raised interest rates again, partly because it now projects that inflation will remain high for a longer period.
The central bank stated that it expects inflation to hover around three percent over the next year before gradually declining to two percent by mid-2025.
The increase in interest rates aims to curb demand in the economy, and it is expected that this process will reduce inflation, although in the meantime, Canadians are experiencing higher interest rates on their mortgages.
The report on Tuesday shows that prices for a variety of goods and services are moderating. For example, transportation costs decreased year over year due to the fall in gasoline prices and a slowdown in the growth rate of vehicle prices.
Consumers also paid 14.7 percent less for mobile phone services compared to a year ago, which the federal agency attributes to lower data plan prices and sales promotions.