Key facts
- Canada's annual inflation rate hit 3.2% in May, the highest in 29 months.
- Gasoline prices saw a 33.2% year-over-year increase.
- Food prices rose 3.8% year-over-year.
- Shelter costs increased 1.7%, while mortgage costs decreased 0.2%.
- Core inflation measures remained stable at 2.1% (CPI-median) and 2% (CPI-trim).
Canada's annual inflation rate surged to 3.2% in May, surpassing expectations and marking a 29-month high, according to data released by Statistics Canada. The acceleration was primarily driven by a significant increase in gasoline prices, up 33.2% year-over-year, influenced by global crude oil costs related to the Iran conflict. Transportation costs, which constitute nearly 18.5% of the consumer price index (CPI) basket, saw a 9% annual rise.
Despite the headline figure, core inflation measures remained stable. CPI-median held at 2.1% and CPI-trim at 2%, suggesting that the elevated energy prices were not yet fueling broad-based inflation, aligning with the Bank of Canada's recent assessment. Food prices also contributed to the overall inflation, rising 3.8% year-over-year, with notable increases in fresh fruits and vegetables.
Shelter costs, the largest component of the CPI basket, rose by 1.7%, a slight deceleration from the previous month. This was partly due to a 0.2% decrease in mortgage costs. The monthly inflation rate rose to 1% in May, the highest in 15 months, exceeding the 0.8% forecast.
Analysts anticipate a potential reversal in June's inflation figures, citing an interim peace deal between the United States and Iran as a factor that could ease headline numbers.