Canada’s annual inflation rate eased from 1.6% to 1.3% between April in May, according to Statistics Canada data released Friday (June 23).
Last week’s comments from Bank of Canada officials, including governor Stephen Poloz, signalled the central bank might be ready to hike the benchmark rate as early as July.
The latest data seemingly puts a damper on such speculation.
“Canadian consumer prices were even softer than soft expectations in May, taking some of the steam out of the ‘Bank-is-going-to-hike-rates-soon’ freight train,” BMO chief economist Douglas Porter said in a note to investors.
The 1.3% inflation rate is a six-month low for Canada, which saw the rate peak this year at 2.1% in January.
“In a nutshell, no matter where you look, overall inflation is roughly 1.3% in Canada at this point (or even lower) — Exhibit A for why the Bank can takes it sweet time before raising rates,” Porter said.
“Canada’s inflation rate is now not only well below Britain and the U.S., but it is now also lower than that in China and the EU.”
Energy prices rose 6.8% in May, down from a high this year of 23% in February.
Food prices, meanwhile, dropped 0.1% annually after a 1.1% decline in April.
Consumer prices in B.C. rose at an annual rate of 1.9%.