OTTAWA — Canada's inflation rate tumbled in May as price shocks caused by the Russian invasion of Ukraine have been mostly absorbed, but economists are still expecting the Bank of Canada to move ahead with another rate hike next month.
Statistics Canada reported Tuesday the annual inflation rate fell to 3.4 per cent in May, largely due to lower gasoline prices compared to a year ago.However, the long-awaited decline in food inflation has yet to come through in Canada. Grocery prices were up nine per cent on an annual basis, showing little improvement from April.
The central bank will have a few more data releases to consider before its next rate decision, including a jobs report and a reading on real gross domestic product. Stephen Gordon, an economics professor at Laval University, says the large price increases caused by the Russian invasion of Ukraine have faded from the calculation of the year-over-year inflation rate.
The slowdown in the headline rate comes after inflation ticked up in April to 4.4 per cent, marking a slight reversal of the progress made since last summer. As it gauges inflation pressures, the central bank will be paying particular attention to its core measures of inflation, which strip out volatility. Those measures also declined last month.
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Canada’s inflation rate tumbles to 3.4%, but forecasters still expect July rate hikeOTTAWA — Canada's inflation rate tumbled in May as price shocks caused by the Russian invasion of Ukraine have been mostly absorbed, but economists are still expecting the Bank of Canada to move ahead with another rate hike next month.
Lire la suite »