Canada’s inflation rate falls to 3.4 percent last month

Canada’s inflation rate falls to 3.4 percent last month

Canada’s inflation rate fell to 3.4 per cent in May — the lowest it’s been since June 2021.

But some economists argue a slowdown might not be enough to deter the Bank of Canada from another rate hike in July.

Statistics Canada reported Tuesday the slowdown was largely due to lower gasoline prices compared to a year ago.

However, the long-awaited decline in food inflation has yet to come through in Canada. Grocery prices were up nine per cent on an annual basis, showing little improvement from April.

Prices of edible fats and oils saw a 20.3 percent jump, while costs were up 15 percent for bakery products and 13.6 per cent higher for cereals, according to the agency.

The Bank of Canada justified its most recent rate hike in part by pointing to the slight rise in inflation in April. It’s expected to make its next interest rate decision based on incoming economic data, including Tuesday’s inflation report.

Forecasters and the central bank were expecting inflation to fall considerably this year to about three percent this summer.