04:18 PM EDT, 07/15/2025 (MT Newswires) -- The Toronto Stock Exchange fell off a record high on Tuesday following the release of June inflation by the United States and Canada.

The S&P/TSX Composite Index closed down 144.71 points at 27,054.14, dropping off Monday's record close of 27,198.85. Sectors were mostly down. Financial and Information Technology led the decliners, falling 2.9% and 2.3%, respectively. Utilities topped the gainers, up 1.7%.

Statistics Canada reported Canada's Consumer Price Index (CPI) rose 1.9% annualized in June, up from 1.7% in May, but under the Bank of Canada's 2% target.

The U.S. Bureau of Labor Statistics reported the June CPI rose 2.7% annualized, meeting expectations but up from May's 2.4 rate. Core CPI, excluding food and energy prices, rose 2.9% last month, up from 2.8% in May.

Derek Holt, head of capital market economics at Scotiabank, said the reliability of U.S. inflation data is "highly questionable," arguably at the worst possible time for markets. He added that there are two key reasons for this. First, the seasonal adjustment applied to June's core CPI data appears to have artificially suppressed the inflation reading. The unadjusted core CPI increase for June was among the largest ever for that month, yet the seasonal adjustment factor used was the lowest on record for any June. This kind of calculation is heavily influenced by recent trends and pandemic-era distortions, many of which are now outdated, he said.

Second, the share of the CPI basket based on estimated or proxy prices rather than actual collected data has reached 35%, up from 30% in recent months and more than double the previous record set during the height of the pandemic. The US Bureau of Labor Statistics attributes this to budget cuts under the Trump administration, which reduced the agency's ability to collect in-person pricing data, Holt said.

"Proving that this distorts CPI is impossible, but it would stand to reason that one should be extremely guarded toward the quality of the data when so much of the basket is being inferred and will never be revised since the data has fundamentally gone AWOL," he added.

David Doyle, head of economics at Macquarie Group, said while core inflation rose slightly less than forecast at 0.23% month-over-month, it was enough to push the year-over-year core rate to 2.9%. "There was evidence of tariff price pass through with core goods accelerating, and this particularly apparent in the ex-used cars and trucks measure," he added.

Looking ahead, Macquarie expects core inflation to stay elevated through the end of the year as tariff effects continue. The firm also expects the upcoming core Personal Consumption Expenditures inflation reading to be on the firmer side, with more clarity expected from tomorrow's Producer Price Index release.

"Our view on Fed policy remains unchanged with these data. We continue to expect 25 bps in easing ahead in 2025 and a further 25 bps in 2026. Our baseline timing for the first cut is December," Doyle said.

In connection with Canada's CPI, he said the data is likely to give the Bank of Canada some pause after the moderation in May. He added that inflation is expected to cool unevenly. Higher unemployment and slower private sector wage growth should help, as will easing shelter costs due to slower population growth. A stronger Canadian dollar could also reduce pressure from import prices.

Because of today's data and last week's jobs report, Macquarie now sees just two more rate cuts this year, totaling 50 basis points, with the next likely in October, Doyle said. The firm previously expected three cuts, starting in July.

West Texas Intermediate (WTI) crude oil closed lower on Tuesday after U.S. President Donald Trump declined to impose fresh sanctions on Russian oil exports, giving the country 50 days to end its war on Ukraine before imposing secondary tariffs on buyers of the country's oil. WTI crude oil for August delivery closed down US$0.46 to settle at US$66.52 per barrel, while September Brent crude was last seen down US$0.45 to US$68.76.

Gold traded lower midafternoon on Tuesday along with the dollar after U.S consumer prices rose as expected in June. Gold for August delivery was last seen down US$22.60 to US$3.336.50 per ounce.