Canada: Inflation stable in May

Seasonally-adjusted consumer prices rose 0.1% from a month earlier in May, matching April’s 0.1% increase. According to Statistics Canada, the increase was driven by higher shelter and transport prices, as well as sharply higher prices for recreation, education and reading. Food prices, meanwhile, eased marginally in the month.

Inflation was stable at April’s 2.2% in May, a notch below market expectations. May’s reading saw higher prices across all categories and was driven by the faster rise of fuel costs. Meanwhile, annual average inflation ticked up to 1.8%, the highest level in three years, from 1.7%. Core inflation, which excludes volatile items including fuels and fresh produce, ticked down to 1.3% (April: 1.5%).

Canada Inflation Forecast

In its April monetary policy report, the Bank of Canada forecast inflation averaging 2.3% in 2018 and 2.1% in 2019. FocusEconomics Consensus Forecast analysts see inflation averaging 2.2% in 2018, which is up 0.1 percentage points from last month’s forecast. For 2019, our panelists see inflation averaging 2.0%.