Inflation in May Dipped to 1.5%

Inflation magnifying glass

CBJ — Canada’s inflation rate dropped to 1.5% in May as food prices posted their smallest annual increase in more than two years.

Statistics Canada reports that the consumer price index dipped to 1.5% in May, down from 1.7% in April. Many economists had been expecting a rate of about 1.6%.

All eight components tracked were in positive territory, but gasoline and food prices dragged the total down. Gasoline prices were down by just more than 7% in the year up to May, while food prices increased by 1.8%. That’s the smallest increase seen since March of 2014.

Shoppers can thank the resurgent loonie for taking away some of the bite of runaway prices at the grocery store.

The downward drag from gasoline, fuel oil and natural gas was countered by higher prices for purchases such as electricity, passenger vehicles and home insurance.

The core inflation rate, which excludes some volatile items such as gasoline prices, rose to 2.1 per cent last month after a 2.2% reading in April.

Inflation was lower in eight provinces in May compared to the previous month. Only Manitoba saw a higher rate and Alberta showed no change.