Bank of Canada Governor Tiff Macklem has more ammunition to cut interest rates later this month after June's inflation rate came in at 2.7 per cent.
Statistics Canada's Consumer Price Index report said inflation fell last month after a slight uptick in May's rate of 2.9 per cent.
Last month, the Bank of Canada cut its key lending rate by 25 basis points to 4.75 per cent after inflation showed signs of slowing. Tuesday's report gives the bank another reason to follow through on Macklem's word to cut rates further when it makes its announcement on July 24.
A slower year-over-year growth in gasoline prices gets the credit for June's deceleration. Following a 5.6 per cent hike in May, last month's increase was just 0.4 per cent from a year ago.
Statistics Canada said the smaller increase coincided with an announcement from the Organization of Petroleum Exporting Countries and its partners to gradually phase out voluntary production cuts later this year and restart some refineries following spring maintenance.
Without gasoline, inflation was 2.8 per cent last month.
The costs of durable goods slowed 1.8 per cent in June.
The price of passenger vehicles was down 0.4 per cent, mostly because of a drop in the cost of used cars and trucks, which dropped 4.5 per cent from 12 months ago and a better inventory. The slowdown is the most significant since February 2015.
Improving supply chains helped slow furniture prices by 3.9 per cent. The report also noted higher interest rates encouraged consumers to spend less on big-ticket items, driving down demand.
The cost of maintaining your cell services was down 12.8 per cent following May's 19.4 per cent deceleration.
Those on vacation spent 11.1 per cent less on travel tours.
Where Canadians spent more last month was in the grocery store. Dairy products rose two per cent, fresh vegetables increased 3.8 per cent, non-alcoholic beverages cost another 5.6 per cent, and fruit and fruit preparations climbed 9.5 per cent from June 2023. However, the cost of fresh fruit was down 5.2 per cent.
Since June 2021, the cost of groceries has risen 21.9 per cent.
Statistics Canada plans to release its Consumer Price Index report for July on August 20.
Elsewhere in the G7 nations, Italy's inflation rate held steady in June at 0.8 per cent. The U.S. rate was 3 per cent. It was 2.2 per cent in both Germany and France, 2.1 per cent in Japan, and two per cent in the United Kingdom.