Inflation Rate Rises At fastest pace in decade
Statistics Canada said the consumer price index in May was up 3.6 per cent compared with a year ago, its largest yearly increase since May 2011.
The reading for May compared with a year-over-year gain of 3.4 per cent in April, which at the time was the fast annual rate in nearly a decade.
Part of the reason for the quick inflation gain is that prices on key goods decreased during the pandemic in 2020 and are now rebounding from a low comparison point last year.
Across Canada, housing prices rose 4.2% on average since May of 2020. That’s the largest yearly increase since September 2008, Statistics Canada said in a news release on Wednesday.
Prices for durable goods (appliances, TVs, jewellery, cars, furniture, etc.) rose 4.4% year-over-year in May, the fastest pace since 1989.
Year over year, prices for gasoline rose at a slower pace in May (+43.4%) than in April (+62.5%). Higher prices in May 2020, when gasoline prices began to recover from the initial impacts of the COVID-19 pandemic, were used as the basis for the year-over-year comparison, contributing to the slowdown in year-over-year growth. In May 2020, gasoline prices rose 16.9% month over month, recovering from March (-17.8%) and April (-15.2%), when both supply- and demand-related factors contributed to significantly lower prices at the gas pumps.
On a monthly basis, gasoline prices were up 3.2% compared with April 2021. Much of this gain was driven by supply disruptions to pipelines in the United States and the maintenance of production cuts by international oil producers.
Prices for passenger vehicles led to the increase in prices for durable goods, rising 5.0% year over year in May, the largest yearly gain in the purchase of passenger vehicles index since September 2016. The increase was partly the result of supply chain issues related to a global shortage of semiconductor chips.
Furniture prices (+9.8%) posted their fastest growth rate since 1982, with prices for upholstered furniture (+10.3%) contributing the most to the increase. The gain in furniture prices was mainly driven by a base-year effect. In May a year earlier, when retail stores were temporarily closed as in-person shopping was suspended, prices fell because of large discounts. While the furniture price index grew at a faster pace primarily as a result of a base-year effect, higher costs of inputs such as lumber also contributed.