Canada: Annual CPI declines to 3.4% in May as expected

Annual inflation in Canada declined from 4.4% in April to 3.4% in May.
The annual rate is the lowest since June 2021.
USD/CAD rises after Canadian and US economic data to fresh high above 1.3160.

Matías Salord FXStreet

Annual inflation in Canada, as measured by the Consumer Price Index (CPI), declined to 3.4% in May from 4.4% in April, Statistics Canada reported on Tuesday. This reading came in line with market expectations and is the lowest since June 2021. "The slowdown was largely driven by lower year-over-year prices for gasoline (-18.3%) resulting from a base-year effect. Excluding gasoline, the CPI rose 4.4% in May following a 4.9% increase in April."

On a monthly basis, CPI rose 0.4% in May, compared to analysts' estimate of 0.5%. "The largest contributors to the month-over-month increase were mortgage interest costs and travel services, which includes traveller accommodation and travel tours. On a seasonally adjusted monthly basis, the CPI rose 0.1%", reported Statistics Canada.

Additionally, the Bank of Canada's Core CPI, which excludes volatile food and energy prices, dropped to 3.7% on a yearly basis from 4.1% in April, below the 3.9% of market consensus.

Market reaction

The Canadian Dollar weakened after the report. USD/CAD edged higher after the report, reaching a fresh daily high at 1.3172.

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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