Energy supply disruptions and rising grocery prices played a key role in inflation numbers
Canada's annual inflation rate climed to 3.2 per cent in May, up from 2.8 per cent in April, as rising gasoline and grocery costs pushed consumer prices higher across the country, according to data released by Statistics Canada on Monday.
Gasoline was the primary driver, with prices surging 33.2 per cent year over year in May compared with 28.6 per cent in April. Supply uncertainty tied to the conflict in the Middle East as the closure of the Strait of Hormuz placed sustained upward pressure on fuel costs for three consecutive months. Canadians notably paid the highest gasoline prices since June 2022, when Russia's invasion of Ukraine disrupted global energy markets.
Even excluding gasoline, the Consumer Price Index (CPI) still rose at a faster pace in May, increasing 2.2 per cent year over year compared with 2.0 per cent in April.
Food purchased from stores also contributed meaningfully to the headline figure as grocery inflation reached 4.3 per cent year over year in May, marking the 16th consecutive month it has outpaced overall CPI growth. Fresh vegetable prices climbed 9.0 per cent, with tomatoes alone rising 45.2 per cent due to supply contractions in Mexico caused by poor weather and reduced planted acreage following the implementation of US tariffs. Fresh fruit prices rose 5.3 per cent, driven largely by berries and grapes.
Travel costs added further pressure, with travel tour prices swinging from an 11.0 per cent year-over-year decline in April to a 0.7 per cent increase in May. Air transportation prices rose 7.4 per cent as airlines contended with elevated jet fuel costs.
Meanwhile, shelter costs continued to ease. Shelter inflation slowed to 1.7 per cent in May from 1.8 per cent in April. Rent growth edged down to 3.5 per cent - the lowest level since January 2022 - while the mortgage interest cost index posted its 33rd consecutive month of year-over-year deceleration. The homeowners' replacement cost index declined for the 13th straight month.
Among durable goods, computer equipment prices rose 3.9 per cent year over year, reflecting rising costs for random access memory and solid-state drives amid heightened demand from artificial intelligence data centres and limited production capacity. Household appliance prices, meanwhile, fell 5.7 per cent, extending their year-over-year decline.
Nationally, all provinces saw faster price growth in May, with gasoline having the largest impact in Atlantic Canada due to higher regional expenditure shares.
