What Canadians are paying more for as inflation spikes to a two-year high
Canadians are paying more for everyday essentials as the country’s inflation rate hits an over two-year high, according to Statistics Canada.
Canada’s national statistics agency released the latest Consumer Price Index on Monday. It found that the country’s inflation rate surged to 3.2 per cent in May, up from a 2.8 per cent gain in April.
The inflation rate has been fluctuating between 1.9 and 2.5 per cent in the past year. The last time Canada reached this high was January 2024.
Statistics Canada
So, what’s causing this spike and how is it affecting Canadians’ expenses?
According to StatCan, higher gas prices continued to drive the increase in inflation in May. It found that on a year-over-year basis, gas prices rose at a faster pace in May by 33.2 per cent compared to April (+28.6 per cent).
“Supply uncertainty stemming from the conflict in the Middle East, specifically the closure of the Strait of Hormuz, put upward pressure on gasoline prices for the third consecutive month,” explained the agency. “Consumers paid the highest prices for gasoline since June 2022, when Russia’s invasion of Ukraine created supply uncertainty.”
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This also affected how much Canadians are paying for travel, specifically travel tours and air transportation. StatCan found that prices for flights rose 7.4 per cent in May compared to the same time last year as airlines experience higher operational costs, notably for jet fuel.
Although gas is a major factor in skyrocketing inflation, StatCan said that excluding gasoline, the CPI still rose at a faster pace year-over-year in May (+2.2 per cent) compared to April (+2 per cent).
Other contributing expenses include soaring prices for groceries, specifically fresh fruit and vegetables.
StatCan found that prices for fresh fruit rose at a faster pace year over year in May (+5.3 per cent) compared to April (-0.5 per cent). The increase was mostly driven by berries and grapes, so you may want to leave those off your next grocery list.
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The price of fresh vegetables also increased by nine per cent in May, following a 4.1 per cent rise in April. StatCan said the spike was driven by higher prices for broccoli, cauliflower, tomatoes, and lettuce.
In fact, the agency found that tomato prices rose a whopping 45.2 per cent in May due to supply contractions in Mexico. This stemmed from poor weather and a reduction in planted acreage after the United States tariffs kicked in.
“Collectively, higher prices for fresh fruit and fresh vegetables contributed to an acceleration in inflation for food purchased from stores, rising 4.3 per cent year over year in May, the 16th consecutive month it has outpaced headline inflation on a year-over-year basis,” stated StatCan.
On the other hand, StatCan found that housing prices continue to decelerate year over year.
Check out Statistics Canada’s full report.