Canada: Cooling core reinforces BoC hold

Research evidence excerpt

Canada: Cooling core reinforces BoC hold

J P M O R G A N Global Economic Research

20 July 2026

Canada: Cooling core reinforces

BoC hold

Economic and Policy Research

Bennett Parrish

(1-212) 622-9003

bennett.parrish@jpmchase.com

JPMorgan Chase Bank NA

• Headline CPI moderated to 2.8%oya in June, as gasoline prices pulled

back from recent highs

• Core measures also came in on the soft side, with the BoC’s measures

dipping below 2% for the first time in nearly six years

• Core goods prices rose just 1.1%oya, services prices were up 2.2%

• Soft underlying inflation should allow the BoC to stay on hold through

year-end

Canada’s headline CPI moderated to 2.8%oya in June from 3.2% in May, as

gasoline prices pulled back from recent highs and core measures came in on the soft

side. Excluding gasoline, the CPI held steady at 2.2%oya in June. The Bank of

Canada’s preferred core measures cooled to an average of 1.9%oya, the first

reading below 2% in almost six years. With underlying inflation below target and

softening, June’s report reinforces our view that the energy-driven spike of recent

months is unlikely to broaden into the rest of the basket. We agree with the BoC’s

assessment that excess supply and labor market slack will remain a material

headwind to inflation. While a re-escalation of the Middle East conflict has pushed

oil prices back up in July, we continue to expect the BoC to look through elevated

energy prices and remain on hold through year-end.

The exclusionary core (ex. food and energy) firmed 0.3%m/m (sa) but has risen just

1.8% over the past year, up modestly from May’s 1.6%. Five of the eight major

basket components saw softer year-ago growth in June compared with May. Goods

prices (excluding food purchased from stores and energy) rose just 1.1%oya and