OTTAWA — Canada’s inflation rate fell to the lowest level in almost 15 years last month, but most Canadians will be feeling that most prices are climbing and some are even soaring.
Consumer prices in May were actually up 0.7 per cent from the previous month, with most items costing more, including the price of filling up the family car at the local gas station.
But because inflation is measured on a year-to-year basis, the official inflation rate dipped to virtually zero in May to 0.1 per cent, the lowest it has been since November 1994, when it stood at -0.1 per cent. In April, the annual inflation rate stood at 0.4 per cent.
The current minuscule inflation rate is almost exclusively due to energy prices, Statistics Canada noted, and even in this category, Canadians could be forgiven for doing a double-take.
”The decline in the energy price index was due more to high prices in 2008 than to recent market developments,” the agency reported, a reference to the period when the price of oil was soaring on its way to a record US$147 a day in July.
In more recent times, Canadians are paying more for energy, particularly for gas. Drivers paid 8.3 per cent more at the pump in May than in April.
They also paid more in May over the previous month — as well as over last year — for most foods, alcoholic and non-alcoholic beverages, tobacco, household operations and furnishings, recreation, education and reading material, and public transportation.
Excluding energy, inflation in Canada remains close to where the Bank of Canada would want it at 2.3 per cent. Core inflation, which excludes volatile items, stood precisely at the bank’s two-per-cent target.
“If you take a little thing called energy out, inflation is still relatively high,” said Bank of Montreal economist Douglas Porter.