CIBC Research discusses its reaction to today's Canada CPI print for the moth of June.

"Another month, another decades-high Canadian inflation reading , but this time lower than anticipated. Headline CPI inflation increased 0.7% month-over-month in June to reach 8.1% year-over-year (consensus +0.9%m/m, 8.4%y/y). Broad inflationary pressures pushed the average of the Bank of Canada’s core measures to 5% from 4.9% in May. As expected, gasoline prices continued their ascension in June and were the big driver of the monthly increase. In what will certainly be some relief to consumers, food prices did not climb higher, surprisingly staying flat on an annual basis at 8.8%. In other good news, CPI inflation excluding food and energy slowed on the month and its annual inflation only increased by a tick to reach 5.3%. This is despite a large increase in the price of passenger vehicles, which jumped 1.5% on the month, to be the second largest contributor to the monthly increase, behind gasoline," CIBC notes. 

"This reading will be a welcome relief for the Bank of Canada since it is below its new forecast released last week, especially given the fall in gasoline prices in . Bond yields fell after the release," CIBC adds.