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Sudden acceleration of inflation in Canada
Canada's inflation rate accelerated to 2.9% in May compared to 2.7% in April
Food prices in Canada have risen by more than 22% in 4 years
Canadian rate cut bets fall to less than 50% next July
Canada's annual inflation rate accelerated to 2.9% in May from 2.7% in April, significantly exceeding expectations of 2.6%.
The broad-based acceleration in the headline CPI was driven by prices for services including cellular, travel, rental and air transportation.
Statistics Canada also indicated that grocery price growth accelerated in May for the first time since June 2023, rising by 22.5% compared to May 2020. While annual energy price inflation slowed to 4.1% from 4.5% in April.
On a monthly basis, the CPI rose 0.6%, beating expectations of 0.3%.
Following the release of the data, financial markets cut their bets significantly and now see a 45% chance of a rate cut in July, from more than 70% seen on Monday.
The Canadian dollar rose against its American counterpart after the inflation data to its highest levels in about 3 weeks, so that each Canadian dollar is equivalent to 73.3 US cents.
