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Canada inflation slows to 1.5 percent in May

Staff writer |
Canada's annual inflation rate decreased to 1.5 percent in May 2016, from 1.7 percent in April.

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Food prices rose at a slower pace while gasoline prices fall accelerated. On a monthly basis, consumer prices increased 0.4 percent, compared to 0.3 percent gain in the previous month.

Food prices posted their smallest year-over-year gain since March 2014, rising 1.8 percent in May, after a 3.2 percent increase the previous month. The index for food purchased from stores advanced 1.4 percent, as prices for fresh vegetables were up 1.9 percent, less than 11.7 percent in April.

Fresh fruit prices also decelerated, posting a 4.9 percent increase, after being up 11.0 percent in April. Prices for food purchased from restaurants rose 2.6 percent, following a 2.7 percent gain the previous month.

The clothing and footwear index was up 1.1 percent, following four consecutive year-over-year declines. This turnaround was mostly attributable to the women's clothing index, which rose 1.8 percent, after falling 0.5 percent in April.

A smaller decrease in prices for footwear also contributed to this turnaround. In contrast, prices for children's clothing were down 2.3 percent, their largest year-over-year decline since August 2014.

The recreation, education and reading index rose 1.6 percent, following a 2.4 percent gain in April.

This deceleration was led by the index for travel tours, down 6.1 percent, after declining 2.0 percent the previous month. In addition, the index for traveller accommodation increased less in May (+2.2 percent) than in April (+5.6 percent).

Gasoline prices were down 7.1 percent in May, after declining 5.8 percent in April. On a monthly basis, gasoline prices registered their third consecutive increase, rising 4.1 percent in May.

The annual core inflation rate was recorded at 2.1 percent, down from 2.2 percent in April and in line with market expectations.

On a monthly basis, consumer prices rose 0.4 percent compared to 0.3 percent growth in the previous month. Transport and recreation prices went up 1.3 percent while food cost dropped 0.3 percent.

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