After rising slightly in April, the national inflation rate fell in May to its lowest level since June 2021.

The year-over-year (y/y) change in the Consumer Price Index (CPI) came in at 3.4% in May compared to 4.4% in April, but was still almost a point-and-a-half above the Bank of Canada’s target of 2%.

A slowdown in annual price growth was widely expected given elevated energy prices in the base period (May 2022).

In Alberta, the CPI grew by 3.1% in May, down from 4.3% in April.

On a year-to-date basis, Alberta’s CPI was up by 3.9% over the first five months of the year compared to 4.6% in Canada as a whole.

Grocery prices, meanwhile, continued to run hot, rising by 9.0% nationally compared to 12 months ago and by 9.2% in Alberta.

Driven by the interest rate hikes aimed at reducing inflation, mortgage interest costs in Canada were 29.9% higher than the year before. (Provincial data are not available.)

Although headline price growth slowed in May, the Bank of Canada will be looking into the weeds at its preferred* measures of core inflation (CPI-trim, CPI-median and CPI-common).

Base effects helped the preferred measures to fall in May (y/y), but they remain well above where the Bank of Canada wants them to be.

Today’s inflation report on its own is unlikely to keep the Bank of Canada from announcing another rate hike on July 12 unless it sees clear signs of economic weakness in the GDP data and Business Outlook Survey results coming out this Friday and in the Labour Force Survey numbers released on July 7.

*Because “the prices of certain CPI components can be particularly volatile [the Bank of Canada] seeks to look through such transitory movements in total CPI inflation and focusses on “core” inflation measures that better reflect the underlying trend of inflation.”

Answer to the previous trivia question: The Gini coefficient is often used to measure income inequality.

Today’s trivia question: What does the E in OPEC stand for?