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The Globe and Mail

Tame inflation means rate hike still a long way off

Canadian twenty dollar bills are seen in this file photo.

Paul-André Belle-Isle/Getty Images/iStockphoto

So Canada once again is looking at an underwhelming set of consumer price index inflation numbers. There's about as much "pressure" there as garden hose without your thumb over the end. (Hey, it's the first day of summer – these are the kind of analogies that come to me.)

And since this is the inflation picture we've been looking at for a few months now, it's a pretty safe bet that the Bank of Canada will remain locked into its low-rates-for-long position when new Governor Stephen Poloz unveils his first policy statement in mid-July. While the year-over-year inflation rate, at 0.7 per cent, is actually below the central bank's comfort level, it's not something we hadn't seen before; maybe the rookie bank boss should be thankful that in his first month on the job, at least the CPI data didn't throw him a curve ball.

That said, the May numbers were not entirely devoid of inflationary life. CPI did tick up 0.1 per cent month-over-month on a seasonally adjusted basis – tepid, to be sure, but still the first uptick since February, a nd only the second monthly increase since October. And there were some pockets of price pressure to speak of (like, for example, the whopping 15-per-cent year-over-year rise in natural gas prices).

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Overall, six of the eight major sectoral components of the index rose in May – representing the broadest gains in 15 months. (Compare this with April, when only two of eight components showed increases.) Alcohol and tobacco prices jumped 0.7 per cent in May from April; food prices were up 0.3 per cent.

Provincially, too, the data show inflationary pressures in some parts of the country. While the big Ontario and Quebec economies (month-to-month increases of just 0.1 per cent) are keeping the overall national inflation rate to a minimum, the story is much different in Western provinces Alberta (up 0.6 per cent), British Columbia (0.6 per cent) and Saskatchewan (0.5 per cent). On a year-over-year basis, inflation in Alberta (which represents 12 per cent of the country's total) is running at 2.3 per cent – the highest in the country, and more than triple the national average.

Getting back to your rising grocery bill, here's a quick look at what products saw price gains last month – and what products enjoyed bargain prices:


Eggs: up 2.2 per cent

Flour: up 3.9 per cent

Apples: up 2.7 per cent

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Oranges: up 6.9 per cent


Sirloin steak: down 6.4 per cent

Bacon: down 1.9 per cent

Sugar: down 1.3 per cent

Shampoo: down 1.8 per cent

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