Canada’s inflation rate rises to 3.2% in May as gasoline prices surge

Canada's annual inflation rate rose to 3.2 per cent in May, up from 2.8 per cent in April and marking its highest level since December 2023, according to Statistics Canada.

The federal statistics agency said the increase was driven largely by a sharp rise in gasoline prices. Gas prices were up 33.2 per cent compared with the same month a year earlier, reflecting concerns over crude oil supplies linked to conflict in the Middle East and the closure of the Strait of Hormuz.

Statistics Canada said Canadians faced the highest prices for gasoline and diesel since June 2022, pushing inflation above the Bank of Canada's target range of two to three per cent.

Despite the increase, economists do not expect the central bank to raise interest rates in the near term. CIBC senior economist Andrew Grantham said oil and gasoline prices have since retreated from their earlier peaks and he expects the Bank of Canada to keep its policy rate unchanged for the remainder of 2026.