Higher gasoline prices contributed to a small rise in Canada’s inflation rate, according to Statistics Canada.
The agency reports that the Consumer Price Index rose 0.1 in May, with transportation costs driving the increase, as gasoline prices rose 16.9 per cent, after falling significantly in April (down 15.2 per cent) and March (down 17.8 per cent). “Rising global demand for oil and gas drove the increase in May, as many countries started to ease restrictions that were put in place in response to the COVID-19 pandemic,” reads the report.
Several major oil-producing countries had also agreed to cut production starting May 1, a development that contributed to the rise in prices by limiting supply. “Despite the monthly increase in May, prices for gasoline were 29.8 [per cent] lower compared with May 2019 and remained below the price level observed in March 2020.”
But if Canadians paid more to drive in May, they paid less for accommodations, as rents declined for the second consecutive month in May, decreasing 0.8 per cent from April.
“Physical distancing measures that kept many Canadians at home and unprecedented employment losses in March and April contributed to lower-than-usual demand for rentals,” it read.
Canadians also paid less for travel and phone services.
This said, items for some prices have gone up when measured on a year-over-year basis because of COVID-19. Consumers paid 7.8 per cent more for meat compared with May 2019, as prices for fresh or frozen beef rose 3.7 per cent, the most since 2015 on a year-over-year basis. “The increase followed a series of supply disruptions, including plant closures as a result of COVID-19, and higher import prices from a weaker Canadian dollar,” it reads.
Year-over-year prices for canned tuna (up 13.9 per cent), flour and flour-based mixes (up 9.4 per cent), and rice and rice-based mixes (up 9.3. per cent) rose in May, coinciding with higher demand for non-perishable foods, it reads. Or as others might say, people having a lot of time for baking.
Looking at the overall year-over-year picture, inflation fell 0.4 per cent in May 2020 compared with a year ago, making it the second month in a row for negative inflation after a 0.2 per cent drop for April.
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