Canada’s Inflation Holds Steady in May, Exceeding Monthly Expectations

Inflation in Canada, measured by the change in the Consumer Price Index (CPI), remained stable at 1.7% year-over-year in May, in line with market expectations, according to data released by Statistics Canada on Tuesday.

On a monthly basis, the CPI rose 0.6%, marking a recovery from the 0.1% decline reported in April. This monthly increase surpassed market expectations, which had anticipated a more modest rise of 0.5%.

The core CPI, which excludes the more volatile food and energy sectors, rose by 2.5% on a yearly basis, matching the previous month’s reading in April.

Despite the data indicating stable inflation levels, the Canadian Dollar (CAD) showed little reaction to the report. At the time of publication, the USD/CAD exchange rate stood at 1.3720, reflecting a slight 0.1% loss for the day.

The stable inflation figures suggest that inflationary pressures in Canada remain contained, which may not prompt any immediate policy shifts from the Bank of Canada. However, the market will likely continue to monitor these figures closely as they provide insights into the overall economic conditions in Canada.