Canadian Inflation Jumps On Soaring Gasoline Prices

Canadian inflation jumped 1.0% in May, the most since January 1991, bringing the annualized rate to 2.2%. It was the first time that consumer prices have been above 2% in four months, as gasoline prices soared 15% from a year ago. The rising energy costs accounted for the majority of the gain as the core reading remained unchanged at 1.5%. A closer look at the breakdown revealed that a 1.4% decline in apparel prices was offset by increases in transportation and recreation. The results which exceeded economist expectations of 1.9% reinforced the BoC’s decision to leave their benchmark interest rates unchanged at their June 10 policy meeting. As long as energy costs remain elevated the central bank may maintain their neutral bias and end their current easing policy.

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