Inflation in Canada ticked up to 2.9 per cent in May, led by higher prices for services, the national statistical agency said Tuesday.
Analysts were expecting a slight slowing in year-over-year price increases following a 2.7 per cent hike the previous month.
Statistics Canada said rent and mortgage interest costs, prices for travel tours and airfare, mostly for trips to the United States, as well as gasoline and car insurance premiums, and groceries all went up in May.
Housing prices, and the costs of telephone and Internet services, computers and men’s clothing fell in the month.
“The past few months had seen price pressures cooling more than expected, so today’s release might simply represent some giveback,” commented Desjardins analyst Royce Mendes.
But if other economic indicators such as unemployment numbers come in higher than expected over the coming weeks, it may give the Bank of Canada pause about lowering interest rates, economists warned.
Most were expecting the central bank to cut its key lending rate at its next meeting in July after earlier this month lowering it by 25 basis points to 4.75 per cent, making it the first among the Group of Seven leading economies to ease monetary policy in the current cycle.
It aims to keep inflation between 1 and 3 per cent.
