Canada inflation holds steady at 2.2pc in May

OTTAWA: Canadians paid 2.2 percent more for goods and services in May than a year earlier, with price hikes recorded in all categories, government data showed Friday.

Inflation was flat from the previous month, but came in well below forecasts of 2.6 percent, firming economists' predictions that the Bank of Canada will hold off on its next interest rake hike when it meets in July.

"Headline inflation came in miles below expectations," CIBC Economics analyst Royce Mendes said in a research note, adding that retail sales "looked ugly."

That weakness, he said, appeared to be concentrated in Ontario and Quebec provinces, where "bad weather likely played a factor in restraining sales."

"Today's bad data make it even more difficult for the Bank of Canada to hike rates in July. But, with the most important numbers yet to come in GDP and employment, there's still time for the data to turn," he concluded.

According to Statistics Canada, gasoline was the biggest contributor to inflation in May, rising a whopping 23 percent year over year.

Higher-priced airline tickets and restaurant meals, as well as increased mortgage interest and home replacement costs were also factors.

Those increases were moderated by lower prices for electricity and natural gas, hotel rooms, furniture, telephone services, computers and digital devices.