Canada’s inflation rate climbs 3.6% in May, largest yearly increase since 2011

Statistics Canada says the consumer price index in May was up 3.6 per cent compared with a year ago, its largest yearly increase since May 2011.

The reading for May compared with a year-over-year gain of 3.4 per cent in April, which at the time was the fast annual rate in nearly a decade.

Part of the rise in the headline inflation barometer is due to comparing prices to the low levels seen last year at the start of the COVID-19 pandemic, such as for gasoline, furniture and beef products.

Excluding gasoline, the consumer price index in May was up 2.5 per cent compared with a year ago.

However, Statistics Canada says the increase in year-over-year price growth in May was led by rising prices for housing and passenger vehicles.

The Bank of Canada expects inflation to hover around three per cent over the summer before easing later this year, then returning toward the bank’s two-per-cent target.

The central bank plans to keep its key policy rate at 0.25 per cent until the economy has recovered and inflation is sustainably back on target.