Canada's Inflation Holds Steady at 1.7%, But Core Pressures Persist

By Troy Tyrell | WBN News Vancouver | July 02, 2025
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Canada’s annual inflation rate remained at 1.7% in May, holding steady from April, according to the latest data released by Statistics Canada. While that number may seem modest, and well within the Bank of Canada's target range of 1–3% underlying price pressures tell a more complicated story.

“Inflation is cooling, but not everywhere,” said RBC economist Claire Fan in a recent report. “Core metrics remain sticky, particularly in services and shelter.”

🔍 Breaking Down the Numbers

• Headline CPI (year-over-year): 1.7%
• Month-over-month increase: +0.6%
• Core CPI (excluding food and energy): +2.7%
• Gasoline prices: ↓15.5% year-over-year
• Shelter costs: ↑3.0%, down from 3.4% in April
• Grocery prices: ↑3.3%

The steep decline in energy costs, particularly gasoline, played a key role in keeping the overall number down. Meanwhile, Canadians are still feeling the pinch at the checkout aisle and through rising rent and mortgage costs.

🧠 What Core Inflation Is Telling Us

While headline inflation gets the most media attention, core inflation, which strips out volatile sectors like food and energy, is what the Bank of Canada relies on when setting interest rates. And here, the news is more concerning:

• CPI-trim and CPI-median, two core indicators used by the Bank, are hovering around 3.0%, down only slightly from earlier this year.

That means while your gas tank may cost less to fill, the costs of everyday essentials, housing, insurance, and services are still rising faster than comfortable.

🏦 What This Means for Interest Rates

With inflation technically under control, many Canadians are hoping for a break on interest rates, especially mortgage holders.

The Bank of Canada recently paused rate hikes, but persistent core inflation may delay any aggressive cuts. Governor Tiff Macklem has repeatedly emphasized that sustained improvement is necessary before considering rate reductions.

“We’re seeing progress, but the job isn’t done yet,” said Macklem in a recent press briefing.

🔮 What's Next?

📆 Next CPI report: Scheduled for mid-July 2025
📉 Economists predict another low headline rate but are divided on whether core inflation will dip below 2.8%.

Meanwhile, businesses, families, and policy watchers remain in wait-and-see mode, hoping that the cooling trend spreads beyond the pump and into the pantry, rent receipts, and service bills.

🔗 Related Articles:

• How Inflation Impacts Canadian Mortgages in 2025
• Budgeting Tips During Persistent Core Inflation
• What a 1.7% Inflation Rate Really Feels Like in Vancouver

By Troy Tyrell, Founder of Tsquared Personal Training
WBN Contributor | Community Builder | Mountain Biker | Advocate for Local Business & Fitness
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