Canada’s annual inflation rate slows to 1% in June

The June number followed inflation readings of 1.3% in May and 1.6% in April.

Last month’s inflation figure matched expectations from a consensus of economists that had predicted a reading of 1%, according to Thomson Reuters Corp.

StatsCan said lower gasoline prices last month were a primary contributor behind inflation’s deceleration as pump prices contracted 1.4% compared with a year earlier.

Electricity prices dropped 5.3% over the same period, while other energy costs rose, including 10% growth in natural gas and a 7.8% increase in the price of fuel oil and other fuels.

Upward pressure on prices also came from a 7.1% rise in traveller accommodation, 7% for travel tours and 2.5% for restaurants.

Food prices were up 0.6% in June — the first increase after eight consecutive months of contractions, the report said.

The latest inflation numbers show that the headline rate once again slipped further away from the Bank of Canada’s (BoC) target of 2%.

Canadian inflation has been dropping since February — the last monthly reading of 2%.

Some experts had pointed to weak inflation data in recent months as a reason for the central to bank to hold off on hiking its benchmark interest rate, despite signs the economy was building momentum

Earlier this month, however, the bank raised its trendsetting rate for the first time in almost seven years.

The data also showed that two of the BoC’s three measures for core inflation, which omit volatile consumer items like gas, accelerated slightly last month to 1.6% and 1.4%. The other one was unchanged at 1.2%.

The inflation-targeting bank also scrutinizes these core measures ahead of its rate decisions.

The agency also released retail trade figures Friday for May that show total sales increased 0.6%, its third straight month of growth. Total retail trade for May rose above $48.9 billion.

The expansion in retail trade was propelled in part by stronger auto sales as well as grocery and alcohol purchases, StatsCan said.