Canada June inflation rate drops to 2.0pc on lower gas prices

OTTAWA: Canada's annual inflation rate in June fell to 2.0% from 2.4% in May, as expected, largely due to lower month-over-month energy prices, Statistics Canada data showed on Wednesday.

The rate matched the forecast by analysts in a Reuters poll. June marked the third month in a row that the rate has met or exceeded the Bank of Canada's 2.0% target for inflation.

Energy prices fell 4.1% year-over-year in June as Canadians paid less for gasoline and other fuels. Oil prices dipped amid rising US fuel inventories and the elimination of carbon pricing in Alberta.

The central bank last week projected the overall inflation rate would dip to around 1.6% in the third quarter because of the dynamics of gasoline prices and other temporary factors before recovering to around 2.0% in the fourth quarter.

Although two of the Bank of Canada's measures of core inflation remained above 2%, CPI common - which the central bank says is the best gauge of the economy's underperformance - was unchanged at 1.8% percent.