Canada's Inflation Holding Steady Despite Tariff Concerns

Canada's annual inflation rate in May held steady at 1.7%, mirroring the previous month, as stable gasoline prices countered potential price hikes from tariffs on steel, aluminum, and automobiles exported to the U.S. Concerns that these tariffs would elevate prices have yet to materialize in the consumer price index.

The removal of taxes on gasoline since April has played a significant role in maintaining lower costs at the pump, expected to last for a year. Additionally, consistently low interest rates have reduced mortgage costs, and decreased demand has driven rent prices down in recent months.

May's monthly inflation, recorded at 0.6% by StatsCan, exceeded analysts' expectations of 0.5%, driven largely by seasonal upticks in travel, accommodation, and energy costs. Meanwhile, the Bank of Canada is carefully observing core inflation measures, CPI-trim and CPI-median, which have eased to 3%, the upper limit of its target range, as it deliberates on its monetary policy for July 30.

(With inputs from agencies.)