Canada\u2019s annual inflation rate remained unchanged at 1.7% in May, according to Statistics Canada data released Tuesday. While aligned with economist forecasts, the muted figure may not be enough to justify a Bank of Canada rate cut in July without stronger disinflationary evidence in coming weeks.<\/p>\n\n\n\n
\u201cNot bad, but should do better to convince the Bank to trim rates,\u201d wrote BMO chief economist Doug Porter. The central bank\u2019s next move, due July 30, hinges on forthcoming data including retail sales, employment, and updated consumer and business sentiment surveys.<\/p>\n\n\n\n
Key components of the Consumer Price Index (CPI) pointed to mixed inflation signals. Shelter costs rose 3% year-over-year, slightly below April\u2019s 3.4%, while rent inflation cooled to 4.5% from 5.2%, with Ontario seeing the sharpest deceleration. The drop was attributed to a rise in rental availability and slower population growth in the province.<\/p>\n\n\n\n
Energy prices fell for another month, led by a 15.5% drop in gasoline prices, aided by the federal government\u2019s carbon tax removal and weaker oil benchmarks. Meanwhile, the mortgage interest cost index declined for the 21st consecutive month, signaling relief for homeowners.<\/p>\n\n\n\n
Airfares dropped 10.1%, while new vehicle prices climbed 4.9%, suggesting early effects from cross-border tariffs. RBC\u2019s Abbey Xu and CIBC\u2019s Katherine Judge expect tariffs to weigh more heavily on future CPI readings, though Judge notes that waning demand, a rising unemployment rate, and a stronger Canadian dollar could soften that impact.<\/p>\n\n\n\n
\u201cInflation is clearly continuing to moderate,\u201d said Karl Schamotta of Corpay. \u201cWhile July remains on the table, a cut in October now looks more likely unless incoming data changes the outlook.\u201d<\/p>\n\n\n\n
StatCan\u2019s core inflation indicators\u2014CPI-trim and CPI-median\u2014both eased to 3.0% in May from 3.1% in April. Judge called the decline \u201ca step in the right direction,\u201d but stressed that the BoC will want to see this trend hold through the next data cycle before easing rates.<\/p>\n\n\n\n
Desjardins\u2019 Randall Bartlett was more optimistic, describing the May inflation print as \u201cgood all around.\u201d He believes the figures will reinforce the Bank\u2019s confidence that earlier core inflation acceleration was temporary and could pave the way for a July rate cut.<\/p>\n\n\n\n
Meanwhile, U.S. Federal Reserve Chair Jerome Powell told lawmakers on Tuesday that the Fed is \u201cwell positioned to wait\u201d for more clarity on the inflationary impact of President Donald Trump\u2019s ongoing tariff strategy. The Fed has not adjusted rates since its last cut in December 2024.<\/p>\n","protected":false},"excerpt":{"rendered":"
Bank of Canada awaits stronger signals as CPI stays at 1.7% Canada\u2019s annual inflation rate remained unchanged at 1.7% in May, according to Statistics Canada data released Tuesday. While aligned with economist forecasts, the muted figure may not be enough to justify a Bank of Canada rate cut in July without stronger disinflationary evidence in<\/p>\n","protected":false},"author":5,"featured_media":6703,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46],"tags":[3886,4210,3812,4211,3030,4215,4212,4213,4214,2937],"class_list":{"0":"post-6702","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-bank-of-canada","9":"tag-canada-inflation","10":"tag-core-inflation","11":"tag-cpi-may-2025","12":"tag-economic-outlook","13":"tag-energy-costs","14":"tag-rate-cut-july","15":"tag-rent-prices","16":"tag-statcan","17":"tag-tariffs"},"_links":{"self":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6702"}],"collection":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6702"}],"version-history":[{"count":1,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6702\/revisions"}],"predecessor-version":[{"id":6704,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/posts\/6702\/revisions\/6704"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=\/wp\/v2\/media\/6703"}],"wp:attachment":[{"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6702"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6702"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/guardianglobe.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6702"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}