Canada's inflation rate was 1.4% in May, less than the 1.8% rate of the previous month.
Statistics Canada reported Tuesday that the Bank of Canada's core index advanced 1.8% in the 12 months to May, following a 1.9% rise in year ending in April. Economists pay closer attention to the so-called core rate because it is the one the central bank bases its interest rate decisions on.
"Both figures were basically as expected," BMO economist Doug Porter noted in reaction to the news. "There's not much new news here for the Bank of Canada, with core inflation perhaps a touch lighter than they initially expected."
Overall, energy prices rose 6.2 per cent between May 2009 and May 2010, following a 9.8% increase during the 12-month period to April. Gasoline prices were 6.9% higher in May on the year, well under the 16.3% annual gain seen in April.
Excluding volatile energy costs, on an annual basis the CPI rose 1% in May, after increasing 1.1% in April.
On a seasonally adjusted monthly basis, the CPI declined 0.1% in May, after remaining unchanged from March to April.
Regionally, consumer prices rose in all provinces in the 12 months to May, but at a slower pace than in April. Ontario and three of the four Atlantic provinces registered the largest year-over-year increases.
"Canadian inflation is going nowhere fast," Porter said. "It's neither sprinting higher, nor falling dangerously close to deflation terrain [as in the U.S.]. While the HST will give it a big bump higher in two months, at least temporarily, it appears that underlying inflation trends remain quite benign."
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