The annual inflation rate skyrocketed to its highest level in nearly 40 years in May, fueled by soaring gas prices, Statistics Canada said Wednesday.
The agency said its consumer price index in May rose 7.7 percent compared with a year ago, its largest increase since January 1983 when it gained 8.2 percent and up from a 6.8 percent increase in April this year.
The gain came as energy prices rose 34.8 percent compared with a year ago with gasoline prices up 48.0 percent compared with a year ago.
Statistics Canada said crude oil prices rose in May due to the ongoing war in Ukraine, as well as increased demand as travel continued to grow in response to eased COVID-19 restrictions.
Excluding gasoline, the annual inflation rate in May rose to 6.3 percent compared with 5.8 percent in April.
The rising inflation rate comes as the Bank of Canada works to bring it back under control.
The central bank has raised its key interest rate target three times so far this year to bring it to 1.5 percent and said that it is prepared to “act more forcefully” if needed, leading to speculation by economists that it could raise rates by three-quarters of a percentage point next month.
The average of the three core measures of inflation that are closely watched by the Bank of Canada rose to 4.73 percent in May compared with 4.43 percent in April.
Statistics Canada said the price for food bought at stores rose 9.7 percent compared with a year ago, matching the April increase, as the cost of nearly everything in the grocery cart went higher.
The cost of edible fats and oils gained 30.0 percent compared with a year ago, its largest increase on record, mainly driven by higher prices for cooking oils. Fresh vegetable prices rose 10.3 percent.
The cost of services in May rose 5.2 percent compared with a year ago, up from a gain of 4.6 percent in April, as Canadians travelled and ate in restaurants more often.
Prices for traveller accommodation gained 40.2 percent compared with a year ago, while the price of food purchased from restaurants gained 6.8 percent.
