Canada's Consumer Price Index (CPI) inflation reading in June reportedly rose to the highest level since January 1983, keeping pressure on the Bank of Canada to continue raising aggressive interest rates.
The consumer price index rose 8.1% from a year earlier based on Statistics Canada data on Wednesday. The inflation rate increased 0.7% from the previous month. However, both figures were lower than expected, with economists expecting an increase of about 8.4% annually and 0.9% monthly, based on the median estimate in a Bloomberg survey.
An increase in the annual inflation rate past the 8% level will keep the Bank of Canada to take economic tightening measures even if the numbers start to slow.
Higher petrol prices were the main contributor to inflation last month, with prices rising 6.2% for the month and 55% for the year. Food and shelter costs, however, show signs of slowing growth. Food prices rose 0.1% in the month, the slowest increase in a year.
The cost of protection rose 0.4%, the smallest increase since November. This partly reflects real estate commissions being lower as the housing market slows, Statistics Canada reports.
Earlier this month, the Bank of Canada estimated inflation would average about 8% through the third quarter of 2022 before slowing. Swaps trading showed investors expected the central bank to raise its key interest rate by another 75 basis points in September, after a full percentage increase in early July.
