Canada CPI To Ease In June

Statistics Canada will be releasing the monthly inflation figures later today. According to the median estimates from economists, Canada’s inflation is forecast to slow.

After inflation surged in May, headline CPI is forecast to rise just 0.2% on a month over month basis in June. This marks a slower pace of increase compared to the 0.4% rise seen in May 2019.

On a year over year basis, Canada’s annual inflation is expected to ease from 2.4% to 2.1% in the twelve months ending June 2019.

Most of the gains in inflation during May came from higher food prices. On the contrary, fuel and energy prices fell. When excluding the volatile components, Canada’s inflation rate edged higher by 2.7%.

Following the May 2019 inflation figures, the Bank of Canada held interest rates steady at 1.75%. The odds for a rate cut also fell sharply.

While Canada is experiencing a rebound in the economy, recent data has been subdued. For example, the recently released monthly jobs report showed Canada’s unemployment rate rising from 5.4% to 5.5%.

The economy was also seen losing 2,200 jobs during the month, following two consecutive months of solid gains.

Canada’s Consumer Prices Surge in May 2019

Consumer prices in Canada rose 2.4% in May compared to the same month, a year ago. The gains in consumer prices came on higher food prices. In April, Canada’s inflation rate nudged to 2.0%, official data from Statistics Canada showed earlier in June.

On a year over year basis, prices rose in all of the eight categories in the consumer price index. There were some significant increases seen in food prices. Food prices rose 12% during the twelve months through May 2019. This followed a 3% increase in the twelve months through to April.

Canada Inflation

 

Canada Inflation, May 2019

The acceleration in inflation came due to the growth in food prices. Cost of fresh vegetables rose 16.7% while the price of meat products grew 2.9%.

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