Canada’s annual inflation rate stayed put at 1.7 % in May, with milder housing costs acting as the main brake on overall price growth, Statistics Canada reported Tuesday.
Shelter prices rose 3 % year-over-year, down from April’s 3.4 %.
The slowdown was most pronounced in Ontario, where weaker population gains and a pickup in new housing supply cooled rent increases.
Mortgage-interest costs eased for the 21st straight month, reflecting the Bank of Canada’s earlier rate cuts.
“With immigration rules tighter and the population flat in Q1, rental demand softened, dragging rents and home prices lower,” said Tu Nguyen, economist at RSM Canada.
Nguyen noted that retaliatory duties have not fueled prices as feared, thanks to many goods qualifying for duty-free trade under CUSMA (Canada-U.S.-Mexico Agreement).
Grocery bills rose 3.3 %, half a point less than in April.
Gasoline remained cheaper on an annual basis due to the axed federal carbon levy, though the monthly drop at the pumps was smaller than a year ago.
Travel-related costs, including tour packages and airfare, slipped.
New-vehicle prices jumped 4.9 %, driven by costlier electric models.
After stripping out tax effects—most notably the carbon price removal—inflation stayed 2.3 %. The Bank of Canada’s preferred core gauges ticked down to 3 %, still above the 2 % target.
“The headline looks calm, but core remains too high for comfort,” wrote BMO chief economist Douglas Porter, adding the Bank will need “much more progress” before declaring victory.
The central bank’s next rate decision arrives on July 30.
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