Consensus of economists believe inflation will come in around 2.9 per cent which would put it into the Bank of Canada’s 1 to 3 per cent target range, thanks largely to a fall in gas prices.
Statistics Canada is set to release inflation data for June Tuesday morning, and most economists expect the annual rate fell, thanks to a drop-off in prices at the pump.
A consensus of economists surveyed by Bloomberg believe the Consumer Price Index — a broad-based measure of inflation — was 2.9 per cent higher in June than it was a year earlier. That’s a drop from the 3.4 per cent annual inflation rate seen in May, and substantially lower than the 8.1 per cent inflation peaked at last June.
It’s also below the top of the Bank of Canada’s 1 to 3 per cent target range for inflation. The Bank has said publicly it’s aiming to bring inflation down to 2 per cent, the middle of its “control range.” Last March, the Bank of Canada began an aggressive interest rate-hike campaign in a bid to drive inflation down. Before the campaign, the Bank’s key overnight rate sat at 0.25 per cent. Now, after 10 hikes, it sits at 5 per cent, the highest it’s been in 22 years.
The theory is that by making it more expensive to borrow money, consumers — and businesses — will spend less, driving prices down and slowing the economy.
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