Canada’s inflation rate hit 2.2% in May, jumping from Aprils official rate of 1.7%. The dramatic increase is blamed mostly on increasing fuel cost:
Statistics Canada said gas prices rose 15 per cent in May from a year earlier, up from a year-on-year pace of 11.6 per cent in April. Excluding gasoline prices, the 12-month growth in the CPI in May was 1.6 per cent, it said.
Meanwhile core inflation, which excludes volatile energy and food prices and which the central bank monitors for underlying price pressures, rose 1.5 per cent in May from the same month last year – the same pace as the 12-month increase in April.
“Lower prices for passenger vehicles dampened the upward pressure on the core index,” the agency said.
Last week, the Bank of Canada surprised markets by not cutting its key interest rate and expressing concern over growing inflationary pressures. The key rate remains at three per cent.
Thursday’s CPI number surpassed the central bank’s two per cent target.
Most economists had expected May’s inflation rates would be around 1.9 per cent.
We could always deal with inflationary concerns the way Argentina does – They’ve managed to maintain a remarkable 0.6% official inflation rate in May thanks to the innovative way they calculate the figure:
According to the new methodology, every time a product’s price rises too sharply, it will simply be removed from the index on the ground that consumers will be deterred by the expense and switch to other goods.