The annual inflation rate in Canada eased to 2.7% in June, surprising expectations that it would hold steady at 2.9%. This marks a continuation of the disinflation trend we've seen in Canadian consumer prices.

Transportation Costs: Inflation fell significantly for transportation (2% vs 3.5% in May), driven by a sharp slowdown in gasoline prices (0.4% vs 5.6%). This coincides with OPEC’s decision to gradually phase out production cuts.

Shelter Costs: While still elevated, shelter inflation also dropped slightly (6.4% vs 6.2%) as rate cuts by the Bank of Canada and lower bond yields ease mortgage rates and rental market competition.

Food Prices: On the downside, food prices saw an acceleration (2.8% vs 2.4%), with grocery costs continuing to rise.

Impact on Mortgage Rates: With the Bank of Canada’s next meeting coming up on July 24th, this easing inflation could influence the BoC's decision to further reduce interest rates, potentially leading to lower mortgage rates. This would provide much-needed relief for mortgage holders and those looking to enter the housing market.

Stay informed about the latest trends and how they might impact your mortgage decisions!