07/22/2016 12:42 EDT | Updated 07/22/2016 12:59 EDT

Canadian Food Prices Are Seeing A Complete Turnaround

Toronto, Vancouver top the country on inflation.

What a difference a few months makes. After suffering through the shock of rapidly rising food prices earlier this year, due to a tumbling loonie, Canadians are now seeing stable and even falling prices at the checkout line.

Statistics Canada's latest consumer price index shows food costs fell 0.3 per cent in June from a month earlier. The overall consumer price index was steady at 1.5 per cent, the same rate as the previous month.

Compared to a year ago, food is up 1.3 per cent, the slowest rate of growth since 2014. Food inflation had been running at three to 4.5 per cent for much of the past two years.

Meat prices, which suffered through several years of rapid growth, are 0.3 per cent lower than a year ago, their first annual decline since 2010. That's thanks in part to a 1.5-per-cent price drop in the past month.

Fruit and vegetable prices — which saw double-digit growth in the early months of the year as a falling Canadian dollar drove up imported food costs — have now stabilized.

(Photo: Andrew Peacock via Getty Images)

Fruit prices fell 0.1 per cent in the month, though prices are still 3.9 per cent higher than a year ago. As recently as February, fruit prices were growing at a more than 10-per-cent annual pace.

Vegetable prices are up 2.9 per cent in the past year, a considerably slower rate of growth than the 14-per-cent rate at the start of the year.

The Canadian dollar is at least partly behind this. After dropping more than 30 per cent over two years, the loonie saw some bounce-back this spring, taking some pressure off food importers who have faced steeply rising costs in recent years.

The Canadian dollar declined with oil prices for two years, before mounting a comeback in the first half of 2016. (Chart: BMO)

Toronto, Vancouver lead on inflation

Not only are Toronto and Vancouver experiencing major house price growth and creating all of the net jobs in Canada, they are — along with St. John’s — the cities seeing the fastest inflation in Canada.

Vancouver inflation accelerated to 2.4 per cent at an annual pace in June, up from 2 per cent the month before. The city now leads the country in price hikes. It took that crown from Toronto, which registered 2.1 per cent inflation in June, the same rate as a month earlier.

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