Canadian prices, as measured by the Consumer Price Index (CPI), rose 1.7 per cent on a year-over-year basis in May, matching the 1.7 per cent increase in April. Month-over-month, on a seasonally adjusted basis, the CPI was up 0.2 per cent in May. Downward pressure on headline CPI was largely driven by lower rent increases from the previous year, with shelter prices growing by 3.0 per cent in May, down from 3.4 per cent in April. In addition, the CPI ex-energy rose by 2.7 per cent in May. While shelter has historically been the main driver of inflation, food price growth has now outpaced shelter price growth for the second consecutive month, largely as a result of tariffs on many grocery items. In BC, consumer prices rose 2.3 per cent year-over-year in May, up from 2.0 per cent in April. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, are both at 3.0 per cent year-over-year. 
 
May's CPI report, similar to the previous month, demonstrates lingering upward pressure on prices beyond the headline measure. On a 3-month annualized basis, the Bank of Canada's core measures of inflation remain at the upper end of their target range, largely due to the price impacts of tariffs on major components such as food. While both trimmed and median CPI fell from April, core inflation remains high enough that markets are uncertain about the Bank of Canada's direction at its next meeting. Friday's economic growth report will bear a strong impact on how the Bank proceeds in July, as they look to balance the inflationary risks of tariffs with ongoing weakness in the economy from trade uncertainty.

Copyright British Columbia Real Estate Association. Reprinted with permission.