For the first time since April 2023, Canada's inflation rate topped three per cent. It was 3.2 per cent year-over-year in May, an increase from 2.8 per cent the previous month.
The price of gasoline continued to put upward pressure on the inflation rate for a third straight month. In May, Canadian drivers paid 33.2 per cent more for gas than in May 2025, following April's 28.6 per cent increase. Uncertainty over oil supplies from the Middle East, and more specifically the closure of the Strait of Hormuz, drove up gas prices for the third straight month.
Without gas in the mix, inflation was 2.2 per cent in May, up two-tenths of a percentage point from April.
The cost of groceries continued to accelerate faster than headline inflation for the 16th consecutive month. Fresh fruit and vegetables cost 4.3 per cent more than a year ago. The cost of fresh fruit rose 5.3 per cent, mainly because of higher prices for grapes and berries. Fresh vegetables rose 9 per cent, as the cost of tomatoes from Mexico shot up due to poor weather and reduced acreage because of U.S. tariffs.
Shelter costs rose 1.7 per cent after dropping 1.8 per cent in April. The homeowners' replacement index fell 2.5 percentage points, commissions on real estate sales dropped 2.1 per cent, the mortgage interest cost index slipped 0.2 per cent, and rental costs were up 3.5 per cent.
After an 11 per cent tumble in the cost of travel tours and air transportation in April, those prices accelerated 0.7 per cent in May. Air transportation costs another 7.4 per cent as airlines cope with higher fuel costs related to the war in Iran.
Canadians also paid 3.9 per cent more for computer equipment and software as demand from artificial intelligence data centres jumped and production capacity dropped.
Elsewhere in the G7, Japan had the lowest inflation in May at 1.5 per cent, while the U.S. had the highest at 4.2 per cent. The United Kingdom's inflation rate in May was 2.8 per cent, 2.4 per cent in France, Germany's rate was 2.6 per cent, and Italy's was 3.2 per cent.
Statistics Canada will release its Consumer Price Index report for June on July 20.
