{"id":13018,"date":"2026-07-17T14:44:16","date_gmt":"2026-07-17T14:44:16","guid":{"rendered":"https:\/\/www.rbc.com\/en\/economics\/?p=13018"},"modified":"2026-07-17T14:44:18","modified_gmt":"2026-07-17T14:44:18","slug":"canadas-headline-inflation-likely-eased-while-core-prices-held-steady","status":"publish","type":"post","link":"https:\/\/www.rbc.com\/en\/economics\/forward-guidance\/canadas-headline-inflation-likely-eased-while-core-prices-held-steady\/","title":{"rendered":"Canada\u2019s headline inflation likely eased while core prices held steady"},"content":{"rendered":"\n
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For the week of July 20th<\/sup><\/strong><\/p>\n\n\n\n

June\u2019s Consumer Price Index report on Monday will provide an updated look at inflation trends following the Bank of Canada’s decision<\/a> to leave interest rates unchanged for a sixth consecutive meeting.<\/p>\n\n\n\n

We expect headline inflation eased to 2.8% year-over-year, down from 3.2% in May. Much of the moderation is expected to reflect lower energy prices in June with gasoline and fuel prices declining 10% and 6.3%, respectively, from May.<\/p>\n\n\n\n

Energy prices are still expected to remain higher from a year ago, but their contribution to headline inflation should moderate. Food price inflation, meanwhile, is expected to remain firm at 3.6%, easing only modestly from 3.8% in May.<\/p>\n\n\n\n

Outside of more volatile components, inflation pressures are expected to remain broadly stable. We expect inflation excluding food and energy to hold close to 1.6% y\/y, little changed from May, while the BoC’s preferred core inflation measures are likely to remain consistent with inflation running near the 2% target.<\/p>\n\n\n\n

Recent inflation reports have continued to point to a divergence between headline and underlying inflation with headline readings boosted by elevated energy prices, while broader price pressures have stayed comparatively contained.<\/p>\n\n\n\n

That distinction is likely to remain central to the BoC\u2019s assessment of the inflation outlook. Policymakers have emphasized they are focused on whether higher energy costs spill over into broader consumer prices rather than on the direct impact of commodity price movements.<\/p>\n\n\n\n

To date, there has been little evidence of such second-round effects, supporting the central bank\u2019s view that underlying inflation remains consistent with price stability. This is in line with both the BoC’s latest projections and our base case forecasts, which assume inflation will gradually return toward the 2% target over the forecast horizon while the central bank remains on hold through 2026.<\/p>\n\n\n\n

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