Canada’s annual inflation rate skyrocketed to 7.7% in May 2022, the highest since January 1983.
This was disclosed by Statistics Canada data today, which stated that excluding gasoline, the CPI rose 6.3% year over year in May, after a 5.8% increase in April.
In every province, prices increased more in May compared to April, driven by higher gas prices and supported by higher service expenses. As a result, the pricing pressures persisted across the board, hurting Canadians’ wallets and, in some circumstances, making it harder for them to cover basic costs.
What you should know
- The report stated that “Canadians continued to feel the impact of rising prices in May as consumer inflation rose 7.7% year over year. This was the largest yearly increase since January 1983 and up from a 6.8% gain in April.”
- “The acceleration in May was largely due to higher gasoline prices, which rose 12.0% compared with April 2022 (-0.7%). Higher prices for services, such as hotels and restaurants, also contributed to the increase. Food prices and shelter costs remained elevated in May as price growth was unchanged on a year-over-year basis.” the report added.
- The report also stated that average hourly salaries gained 3.9% year over year in May according to data from the Labour Force Survey, indicating that prices on average increased more quickly than wages during the preceding 12 months.
- The Bank of Canada would face more pressure to hike its benchmark interest rate at its next policy meeting in July to tame rapidly rising prices.
- The central bank slashed its lending rate to 0.25% early in 2020 to stimulate the economy through the pandemic, but in recent months, it has moved aggressively to hike rates. Another expected 75-base point hike would bring the bank’s key lending rate to 2.25%, the highest it has been since the financial crisis in 2008.