Inflation Eases but Rate Hike Still Expected

(Reuters – Louise Egan)

Inflation is not a big threat in Canada right now despite red-hot economic growth, a report showed on Tuesday, but most still expect the central bank to continue raising interest rates next month. A slower pace of gasoline price increases helped the annual inflation rate ease to 1.4% in May from 1.8% in April, Statistics Canada said on Tuesday.

The core rate of inflation, which excludes volatile items like gasoline and is the Bank of Canada’s most trusted gauge of underlying price trends, came in at 1.8% versus 1.9% the previous month. This was just above the 1.7% forecast for May.

“There was really no major surprise here, even though the headline monthly increase looks somewhat on the high side,” said Doug Porter, deputy chief economist with BMO Capital Markets. “The report was quite benign. Overall the main message is that Canadian inflation is really going nowhere fast,” he said.

Read more here. Summary statistics and links to the data files are on the Statistics Canada website at the Statistics Canada website.