Canada’s finance minister calls inflation rate dropping within target range a ‘milestone moment’

Canada’s inflation rate dropping to 2.8 per cent in June is a “milestone moment” that Canadians should find some relief in, according to Deputy Prime Minister and Finance Minister Chrystia Freeland.

Down from 3.4 per cent in May, the annual inflation rate has not been within the Bank of Canada’s target range of between one and three per cent since March 2021.

“That is a significant moment. It should provide a lot of relief to Canadians,” Freeland said, speaking via teleconference with reporters from Delhi, following her participation in a G20 finance ministers’ meeting. “And I really want to thank Canadians, it has been a really tough time economically since COVID first hit, since we had a recession, followed by all the strains of reopening. And this is really a good moment.”

The current rate is the lowest that inflation has been in more than two years, down from a high of 8.1 per cent in June of last year. And as Freeland pointed out, inflation in Canada is now lower than in every other G7 country, where rates range from 8.7 per cent in the UK to 3.2 per cent in Japan.

“It has been a real struggle for Canadians and the Canadian economy to get back down to 2.8 per cent, and I am really grateful to everyone who has sort of [stayed] the course,” Freeland said.

Asked whether she shares the Bank of Canada’s outstanding concern—identified when the central bank raised interest rates again last week—that inflation will stall out above 2 per cent until 2025, Freeland declined to “make predictions or forecasts.” 

“I do not have a crystal ball,” Freeland said. “I do think that today is a milestone moment.”

While Freeland is marking Canada hitting this key inflation metric, many Canadians are still struggling with the impacts of inflation on their daily lives, particularly at the grocery store checkout.

“While Tuesday’s inflation numbers show some progress in stopping prices from rising as quickly, we know there is little chance of prices coming down meaningfully any time soon. This is especially true for the cost of food as grocery inflation remains stubbornly high,” NDP MP and finance critic Daniel Blaikie in a statement. “This news will not bring relief for Canadians struggling with record prices.”

Conservative MP and finance critic Jasraj Singh Hallan called the Liberals “out of touch” for “telling Canadians who are struggling to buy groceries, pay rent, or put gas in their car, that everything is OK.”

“Canadians are facing thousands of dollars of new costs that aren’t going away because of Trudeau’s massive inflationary spending and tax hikes,” he said.

The finance minister said she remains “mindful” that food prices in particular remain high, pointing to the recently-issued one-time grocery rebate for lower-income Canadians. 

“I recognize that the grocery rebate does not compensate everyone for all of the costs that inflation has imposed. But, for a family of four, it’s close to $500, and that is support that’s really needed, coming at an important time. It’s, you know, to give people a little bit of relief,” Freeland said.

At the same time, Freeland put the spotlight on Canadian businesses—whom the federal government helped keep afloat with financial aid during the thick of the COVID-19 pandemic economic shutdown— to recognize that “food prices need to come down.”

“I am really counting on Canadian companies, Canadian food retailers to be responsible right now and to support Canadians and the Canadian economy by a responsible approach to their pricing,” said the finance minister.