Canada's inflation rate slows

OTTAWA, June 27 (Reuters): Canada's annual inflation rate came in at 3.4 per cent in May, its slowest pace in two years, data showed on Tuesday, weakening the case for another hike next month.
Analysts polled by Reuters had expected annual inflation to drop to 3.4 per cent from 4.4 per cent in April. Month over month, the consumer price index was up 0.4 per cent, Statistics Canada said, a tick below forecasts for a 0.5 rise.
The annual rate, which benefited from a comparison to last May's strong price increases, is the slowest since June 2021 and broadly in line with the Bank of Canada's expectation that inflation would cool to around 3.0 per cent by mid-2023.
The central bank hiked its overnight rate to a 22-year high of 4.75 per cent earlier in June after a series of surprisingly strong data, including an unexpected uptick in April inflation, which showed that the economy was running hotter than anticipated.
After the last rate increase, the Bank of Canada said it would be gauging economic data to decide whether to keep raising borrowing costs.
"With the labour market also loosening in May, the case for another rate hike in July is not quite as strong as it seemed a few weeks ago," said Stephen Brown, deputy chief at Capital Economics.