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  • KPB & Co Research

Recent data from Statistics Canada show that prices for the 12-month period ending June-2019 was about 2.0% higher than that recorded 12 months earlier. A look "behind the curtain" shows that Food and Shelter were the only two sub-components that were running at rate that is higher than the Bank of Canada Target rate of 2.0%, with inflation rates of 3.5% and 2.5% respectively. Furthermore, the 2.0% inflation rate is a slight decline from the 2.4% rate recorded in May-2019. For the month of June 2019, overall prices declined by 0.2%.

Canada Inflation Rate (June 2019)

With the inflation rate showing signs of cooling, the Bank of Canada would have more wiggle-room to cut rates in the event that economic growth slows markedly. Already, the Bank of Canada's rhetoric as well as that of other G7 countries' central banks reflects a more dovish posture. The Bank, in its monetary policy meeting, outlined their expectation for economic growth to gain momentum as we approach Q3 and Q4 2019, but is also well aware of the potential of growth to slow further within the context of raising uncertainties around global trade.

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