Canada’s inflation rate rose to 2.9 percent in May
Grocery prices rose 1.5 percent year-over-year in May, a tick higher compared with April, when they rose 1.4 per cent.
Canada’s annual inflation rate rose to 2.9 percent in May, largely driven by higher prices for services, StatCan reported on Jun. 25.
The result was up from an annual inflation rate of 2.7 percent in April.
Statistics Canada said the overall increase for May came as prices for services rose 4.6 per cent from a year ago, up from a 4.2 per cent increase in April. Prices for goods grew at the same rate as April at one percent.
The inflation report follows a decision by the Bank of Canada, which targets an annual inflation rate of two per cent, to cut its benchmark interest rate by a quarter of a percentage point earlier this month to 4.75 percent.
The inflation reading, along with the upcoming June inflation data, are expected to play a key role in the central bank’s next rate decision, set for July 24.
TD Bank senior economist James Orlando said one bad inflation report doesn’t make a trend and inflation remained below three per cent, but it did speak to the unevenness of the path back to two percent.
“For this reason, we think the BoC will likely pause at its July meeting, before cutting rates again in September,” Orlando wrote in report.
Mortgage interest costs were up 23.3 percent compared with a year ago, while rent prices were up 8.9 percent.
Prices in May for travel tours rose 6.9 percent compared with a year ago while air transportation prices increased 4.5 percent.
Gasoline prices were up 5.6 percent compared with a year ago.
Grocery prices rose 1.5 percent year-over-year in May, a tick higher compared with April, when they rose 1.4 percent. It’s the first acceleration in grocery prices since June last year, however Statistics Canada said consumers are paying 22.5 per cent more for groceries compared with May 2020.
