Canada's annual inflation rate shoots up 1.9 per cent in June

Canada’s annual inflation rate rose to 1.9% in June, meeting analysts’ expectations, as increases in the price of automobiles and clothing and footwear pushed the index higher, data showed on Tuesday.

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The consumer price index was at 1.7% in the prior month.

Statistics Canada said on a monthly basis the CPI increased 0.1%, matching analysts’ forecasts.

It is for the third month in a row that the CPI has been under 2%, or the midpoint of Bank of Canada’s inflation target range.

This is the last major economic indicator to be released before the Bank of Canada’s rates decision later this month.

The slight rise in prices across many segments, along with a strong jobs number last week, is likely to take away any incentive to cut interest rates, economists had earlier predicted.

Money markets were betting the odds for a rate cut at just over 15% after the data was released. The central bank will announce its monetary policy decision on July 30.

The Canadian dollar was trading stronger by 0.19% to 1.3677 against the US dollar, or 73.12 US cents. Yields on the government’s two-year bonds were down 0.6 basis points to 2.7618.

The rise in prices in June was primarily led by a 2.7% jump in durable goods such as automobiles and furniture, following a 2% rise in May on a year-on-year basis, Statscan said.

Passenger vehicle prices rose 4.1% on an annual basis in June following a 3.2% increase in May, the agency added.