Economists expect inflation ticked up in June after surprise jobs gain

Statistics Canada is set to release June inflation figures on Tuesday. A shopper pushes a shopping carts as they leave a Real Canadian Superstore in Ottawa on Tuesday, June 25, 2024. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA — Economists expect the pace of inflation picked up in June as the Bank of Canada continues to search for tariff impacts in the price data.

Statistics Canada is set to report consumer price index data for June on Tuesday.

CIBC expects the release will show the annual pace of inflation rose a tenth of a percentage point to 1.8 per cent.

Katherine Judge, CIBC’s senior economist, said in an interview that she expects goods inflation was fuelling price pressures in the month. Some of that can be tied to the impact of Canada’s tariff dispute with the United States, she said.

On the opposite end, Judge is looking for relief on rental prices to help take some of the steam out of shelter inflation.

“The rent index has not yet picked up drops in rents that we’ve seen for vacant units across the country, so that’s something that will partly offset tariff impacts,” she said.

The June CPI release will be the Bank of Canada’s last look at inflation before its next interest rate decision set for July 30.

Financial markets are broadly expecting the central bank to hold its policy rate steady for a third consecutive time at that meeting. LSEG Data & Analytics reported that odds of a quarter-point cut dropped to just 13 per cent as of Friday afternoon after StatCan reported an unexpected gain of 83,000 jobs in June.

Tiff Macklem, the governor of the central bank, said last month that monetary policymakers were noticing some “unusual volatility” in the inflation figures.

He also said underlying inflation could be “firmer” than the central bank first thought, and might be reflecting higher costs from tariffs between Canada and the United States.

Royal Bank of Canada expects the annual pace of inflation accelerated to 1.9 per cent in June.

RBC senior economist Claire Fan said she’s expecting core inflation will still be stubborn in June — hovering at the top end of the central bank’s target band of one to three per cent.

She said food inflation is one area that RBC expects will continue to push up the consumer price index.

While the Bank of Canada and other economic watchers have been scouring price data for evidence of pressure from the U.S. trade dispute, Fan said she’s not expecting “a lot of tariff impact to show up yet.”

Inflation data is also backward-looking by nature, so Fan said she’s leaning more on the Bank of Canada surveys of businesses and consumers set for next week.

These quarterly surveys give the central bank a sense of how businesses are handling tariff pressures and how quickly they might pass costs along to consumers.

Deputy governor Sharon Kozicki signalled in a speech last month that the Bank of Canada is relying more on alternative data sources such as surveys and restaurant reservations to cut through some of the uncertainty in traditional economic data.

“It’s a very limited amount of our data that we’re seeing on inflation right now, but the (business outlook) survey historically has been a really useful gauge of future expectations,” Fan said.

Judge said that while she would normally put more weight on the CPI data, she argued StatCan’s surprisingly strong June jobs report will likely put the central bank on hold until September.

Benjamin Reitzes, BMO’s managing director of Canadian rates and macro strategist, said in a note Friday that he expects headline inflation rose to two per cent in June. He pointed to rising food and transportation costs, and less rosy comparisons to last year’s price data, as driving the acceleration.

Noting that the breadth of inflation widened in the May CPI figures, Reitzes said the Bank of Canada will be looking for signs of a reversal last month to restore confidence that price pressures could be easing.

“Following the huge June job gain, it will take an outsized move lower in underlying inflation for the BoC to even consider cutting in July,” he wrote.

This report by The Canadian Press was first published July 13, 2025.

Craig Lord, The Canadian Press