The annual inflation rate rose slightly last month, but remained tame at 0.7 per cent, which was below analysts’ already modest expectations.
Statistics Canada reported Friday that May’s higher natural gas prices — which had the biggest 12-month increase in more than four years — contributed to inflation, but that was partly offset by another drop in gasoline prices.
“Overall, today’s inflation report showed that consumer prices continue to face little upward pressure,” TD economist Diana Petramala wrote in a commentary.
“Food and shelter costs contributed the most to Canadian inflation in May (they are the category consumers spend the most on), but were still only up 1.3 per cent from year ago levels.”
Petramala noted that higher natural gas prices, which were up 15.4 per cent in May compared with a year earlier, added to the cost of shelter. Rent and property taxes also rose, but mortgage interest costs fell 4.1 per cent.
Statistics Canada said May saw the largest year-over-year increase for natural gas prices since December 2008. Alberta had the biggest jump, but the increases were seen across the country, the agency said.
Food prices rose 1.3 per cent year-over-year in May, after increasing 1.5 per cent in April.
“Compared with May 2012, consumers paid more for food purchased from stores, notably fresh vegetables (up 5.8 per cent) and bakery products (up 3.9 per cent),” Statistics Canada reported. “Prices for fresh fruit and meat also rose in the 12 months to May, although at a slower rate than in April.”
The cost of alcoholic beverages and tobacco products advanced 2.5 per cent in May, led by higher prices for cigarettes in most provinces.