As inflation inches closer to 3 per cent, economists warn progress will stall this year
CTV
As inflation inches closer to three per cent, economists are warning the steady monthly declines in annual price growth will stall and even potentially reverse in the second half of the year.
As inflation inches closer to three per cent, economists are warning the steady monthly declines in annual price growth will stall and even potentially reverse in the second half of the year.
Statistics Canada is set to release its consumer price index report for June next week, and forecasters are anticipating the annual inflation rate fell from 3.4 per cent in May.
"We're expecting a deceleration to three per cent year-over-year. And that's really mainly because the gasoline prices we're paying today are being compared with the very peaks of what we saw last year," said Andrew Grantham, an executive director of economics at CIBC.
But inflation isn't expected to fall much further this year, making the journey back to the two per cent target a long and tumultuous one.
Desjardins chief economist Jimmy Jean says the upcoming CPI report marks a turning point in the fight against inflation.
"June is going to be really the peak disinflationary force coming from gasoline, in our view. So I think once we're past that, we're going to see that it is going to take quite a long time before we get inflation to a place that we're happy with," Jean said.
The rapid deceleration in inflation since last summer has been largely due to base-year effects, which refer to the impact of price movements from a year ago on the calculation of the year-over-year inflation rate.
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