Highest Level In 40 years

The annual inflation rate in May was the highest it has been in nearly forty years, says Statistics Canada, mostly because of soaring gas prices.

May’s consumer price index rose 7.7 percent compared to a year ago. This is the biggest increase since January 1983 when it gained 8.2 percent. This happened because energy prices rose almost 35 percent compared to a year ago, and gas prices were almost 50% higher than last year.

According to Statistics Canada, crude oil prices increased in May due to the ongoing Ukrainian conflict and increased travel due to COVID-19 restrictions being eased.

Excluding gasoline, the annual inflation rate rose to 6.3% in May from 5.8% in April.

Economic experts predict a 75 bps rate hike in the near future due to soaring inflation

Despite the bank’s efforts to control inflation, the rate is rising.

So far this year, the central bank has increased its key interest rate target three times and brought it to 1.5 percent. It has also stated that it is prepared to “act more forcefully” if necessary, which led economists to speculate that it could be raised by three-quarters of a percentage point next month.

“We know inflation is keeping Canadians up at night. It’s keeping us up at night,” the Bank of Canada’s Senior Deputy Governor Carolyn Rogers said in Toronto in reaction to the figures, according to Global News.  “We will not rest easy until we get (inflation) back down to target… That’s why we’re raising interest rates, and we’re raising them quite aggressively,” she added.

Everything More Expensive

According to Statistics Canada, food prices rose 9.7 percent from a year ago, matching the increase in April. Nearly everything in the grocery cart costs more.

Edible fats and oils increased by 30.0% compared to a year ago, their largest increase on record. Cooking oils accounted for most of the increase. Fresh vegetable prices rose more than 10%.

In May, the cost of services rose 5.2 percent over a year earlier, up from 4.6 percent in April, as more Canadians travelled and ate out.

Compared with a year ago, traveller accommodation prices increased by 40.2 percent, while restaurant food prices increased by 6.8 percent.