Inflation in Canada grew at a pace not seen since 1983, further increasing the likelihood of an “oversized” rate hike of 75 basis points at the Bank of Canada’s next meeting in July.
The Consumer Price Index (CPI) accelerated to an annual rate of 7.7% in May. That’s a 1.4% increase from April, and more inflation than Canadians had to contend with in all of 2015, as economists from Desjardins noted.
Core inflation, based on an average of three key measures that strip out the most volatile basket items, rose to 4.73%, up from 4.23% in April. That’s the highest it’s reached since 1990.
The biggest contributors to the increase were rising prices for gasoline (+12% month-over-month), hotels and cars. Food prices were up 8.8% year-over-year, while shelter inflation was up 7.4% and homeowners’ replacement cost was up 11.1% (down slightly…
