Inflation accelerated in May as the costs of services and groceries ticked up, Statistics Canada said Tuesday.
The annual rate of inflation was 2.9 per cent in May, the agency said. That’s up from the 2.7 per cent annual rate in April.
Statistics Canada said inflation on services drove up the headline figure as Canadians paid more on rent, cell services, travel tours and air transportation. Travel to the United States drove the increases in travel costs, the agency noted.
Grocery prices also accelerated slightly, with annual inflation here rising 1.5 per cent, up 0.1 percentage points from April’s pace. The month-to-month increase in grocery prices was the largest seen since January 2023, StatCan said, with cost hikes here driven by fresh fruit and vegetables, meat and non-alcoholic beverages.
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Prices for gasoline were meanwhile down 1.3 per cent on a month-to-month basis in May, StatCan said.
Shelter inflation remained steady at 6.4 per cent annually in May, but pressure ratcheted up on renters. Rent costs were up 8.9 per cent in May, an increase from 8.2 per cent in April.
Inflation has remained under three per cent for all of 2024 so far, but most economists had expected inflation would continue the cooling trend of recent months. The Bank of Canada’s preferred metrics of core inflation also accelerated in May.
The central bank will be watching the May inflation figures closely as it decides whether it can deliver back-to-back interest rate cuts at its next meeting in July.
Katherine Judge, director and senior economist at CIBC, said in a note to clients Tuesday morning that the May inflation figures do not bode well for another rate decrease so soon.
“Overall, with the data showing much faster price pressures than expected, this casts a lot of doubt on the possibility of a July cut,” she wrote.
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