Canada's inflation hits two-year high as gas prices surge
Consumer prices jumped to 3.2 per cent in May, driven by gas prices up 33.2 per cent year-over-year and rising costs for groceries.
The day's top stories, food & events — every morning at 7. Unsubscribe anytime.
Canada's inflation rate surged to 3.2 per cent in May, the highest in over two years, with gas prices and groceries leading the climb.
Statistics Canada reported the jump Monday in its latest Consumer Price Index. The inflation rate rose from 2.8 per cent in April—the last time Canada hit this level was January 2024. Gas prices continued to drive the increase, rising 33.2 per cent year-over-year in May compared to 28.6 per cent in April. The agency attributed the spike to supply uncertainty from the conflict in the Middle East, specifically the closure of the Strait of Hormuz, which put upward pressure on gasoline prices for the third consecutive month. Consumers paid the highest prices for gasoline since June 2022.
Grocery costs also accelerated. Fresh fruit prices rose 5.3 per cent year-over-year, mostly driven by berries and grapes. Fresh vegetables jumped 9 per cent, with tomato prices climbing a particularly sharp 45.2 per cent due to supply contractions in Mexico following poor weather and reduced planted acreage after U.S. tariffs took effect. Collectively, fresh fruit and vegetable price increases contributed to food-store inflation of 4.3 per cent year-over-year—the 16th consecutive month food has outpaced headline inflation.
Airline prices also rose 7.4 per cent as carriers faced higher operational costs, notably for jet fuel. However, housing prices continued to decelerate year-over-year. Even excluding gasoline, the Consumer Price Index still rose 2.2 per cent year-over-year in May, up from 2 per cent in April.
