Annual inflation continues to rise, up to 2.9% in May

The annual rate of inflation was 2.9 percent in May, an increase from the 2.7 percent rate in April.

Annual inflation continues to rise, up to 2.9% in May
The Canadian Press / Adrian Wyld
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Inflation in May accelerated once again, with the costs of services and groceries ticking upward, a new Statistics Canada report released Tuesday said.

The annual rate of inflation was 2.9 percent in May, an increase from the 2.7 percent rate in April, the agency said.

Statistics Canada reported that the increase in the Consumer Price Index "was largely due to higher prices for services, which rose 4.6% in May following a 4.2% increase in April. Faster price growth for services was led by cellular services, travel tours, rent and air transportation. Prices for goods (+1.0%) grew at the same rate as in April."

"On a monthly basis, the CPI rose 0.6% in May, largely stemming from an increase in travel tours. On a seasonally adjusted monthly basis, the CPI rose 0.3% in May," the report noted.

Prices for food purchased from stores increased by 1.5% year-over-year in May, Statistics Canada says, following a 1.4% rise in April. Although this is a slight increase, it marks the first acceleration since June 2023. Grocery prices remain high, having risen by 22.5% compared to May 2020.

On a month-over-month basis, grocery prices rose by 1.1% in May 2024. While this monthly rise is seasonally typical, it is the largest since January 2023. The increase in May 2024 was driven by higher prices for fresh vegetables (+3.5%), meat (+1.3%), fresh fruit (+2.2%), and non-alcoholic beverages (+2.4%). The increase in meat prices was mainly due to higher prices for fresh or frozen beef, driven by high demand and tight supply.

Gas prices went down by 1.3 percent on a month-to-month basis in May. Shelter inflation remained steady at the 6.4 percent annual rate, though pressure on renters increased, with rent costs up 8.9 percent in May, an increase of .7 since April.

Though inflation has remained under 3 percent for 2024, May figures are being watched closely by the central bank. The bank will be deciding whether it can deliver on back-to-back interest rate cuts.

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