Canada’s inflation hits 29-month high amid heightened oil prices
Summary
Canada’s inflation rate rose to 3.2% in May, the highest in nearly 29 months, mainly because oil prices increased due to tensions between the US and Iran. The rise in fuel costs affected transportation and food prices, but recent news about a US-Iran agreement may help lower oil prices and inflation soon.Key Facts
- Canada’s inflation hit 3.2% in May, above the Bank of Canada’s 1%-3% target range.
- Petrol prices increased by 33.2% compared to last year, the biggest rise since Russia’s invasion of Ukraine.
- Transportation costs rose 9% in May due to higher fuel prices.
- Food prices went up 3.8%, with fresh fruit up 5.3% and vegetables up 9%.
- Shelter costs increased by 1.7% in May, with a slight decline in mortgage costs.
- The Bank of Canada views the rise in energy prices as a temporary effect, not leading to wide inflation.
- An interim peace deal between the US and Iran reopened a key oil shipping route, causing oil prices to drop in June.
- Economists see May as likely the peak for inflation but warn that oil price risks remain if tensions grow again.
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