Canada Inflation Rises, Core Pressures Exceed 3%

Canada's annual inflation rate rose to 1.9% in June from 1.7% in May, with core inflation measures now averaging just over 3%. This increase, alongside a higher-than-expected US Consumer Price Index of 2.7%, has led to renewed concerns about delayed central bank rate cuts and caused the Canadian Dollar to weaken against the US Dollar. The Bank of Canada is expected to hold off on further rate cuts as core inflation remains persistently above target. The rise in Canadian inflation is partly driven by US tariffs raising prices for certain goods, as well as increased costs for durable goods and clothing. Similarly, expectations for a Federal Reserve rate cut in September have lessened amid strong US inflation, bolstering the Greenback. Policymakers in both countries are expected to remain cautious as they assess the ongoing effects of tariffs and inflation.