Energy Spike Shows Little Pass-Through to Canada Inflation, Easing Central Bank Concerns, BMO Says

08:50 AM EDT, 06/23/2026 (MT Newswires) -- Signs that higher energy prices are feeding through into broader inflations measures are limited so far, which is "good news" for policymakers who are focused on growth, Bank of Montreal Capital Markets said on Monday.

With energy prices likely to soften in the June consumer price index report, pressures in the near term should ease further, wrote BMO Senior Economist Robert Kavcic in a note after the May data release.

Beneath the "hot" 3.2% year-on-year headline print for May, underlying Canadian inflation measures remain subdued, said Kavcic. The BoC's four closely watched core inflation measures were still contained in May, averaging near 2%, BMO said.

Even with some stronger monthly prints, the underlying trend has remained soft enough to hold the three-month annualized rate near 1.8%, pointing to no meaningful build-up in inflation pressures, the bank added.

For the BoC, "this is good news" as it has one eye on the economy, and the other eye on any evidence of broader pass-through from higher energy prices into inflation, said the BMO economist.

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