Inflation soars to 7.7% in May, highest in nearly 4 decades: Statistics Canada

Statistics Canada says the annual inflation rate skyrocketed to its highest level in nearly 40 years in May, fueled by soaring gas prices.

The agency says its consumer price index in May rose 7.7 per cent compared with a year ago, its largest increase since January 1983 when it gained 8.2 per cent and up from a 6.8 per cent increase in April this year.

The gain came as energy prices rose 34.8 per cent compared with a year ago with gasoline prices up 48.0 per cent compared with a year ago. Excluding gasoline, the annual inflation rate May rose to 6.3 per cent compared with 5.8 per cent in April.

#Breaking Canada's May Consumer Price Index (inflation) climbs 7.7% y/y (est. 7.3%)
-Highest inflation rate since 1983
-Core CPI at a record 4.7%
-Gas prices up 48% y/y

Source: Stats Can/Bloomberg

— Mike Eppel (@eppman) June 22, 2022

The cost of services in May rose 5.2 per cent compared a year ago, up from a gain of 4.6 per cent in April, as Canadians travelled and ate in restaurants more often.

Prices for traveller accommodation gained 40.2 per cent compared with a year ago, while the price of food bought from restaurants gained 6.8 per cent.

Food costs were also up as the cost of food bought at stores rose 9.7 per cent compared with a year ago, matching the April increase, with the prices for nearly everything in the grocery cart going higher.

“Edible fats and oils (+30.0%) recorded its largest increase on record, mainly driven by higher prices for cooking oils,” Statistics Canada said.

Also up, fresh or frozen fish (+11 per cent), as well as carrots, onions, and other fresh vegetables which rose 10.2 per cent on a year-over-year basis.

Meat prices increased at a slower pace compared to the previous month.

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On Tuesday, the Canadian Dairy Commission approved raising the farm gate milk price, allowing producers to increase the price by $1.92/hl (less than 2 cents per litre.)

To consumers, that is expected to translate to higher prices on cheese, milk, yoghurt and other dairy products, as manufacturers are predicted to pass those costs along. 

Dairy Farmers of Canada had asked for the second increase this year due to rising costs for farmers, including feed and fertilizer.