You probably didn’t need Statistics Canada to tell you that everything is getting more expensive, but just in case there was any doubt yesterday’s inflation numbers for May confirmed that prices are rising faster than at any point since 1983.
What happened: Inflation jumped to 7.7% last month, up from 6.8% in April and significantly overshooting analyst predictions.
- The price of gas was a major driver of that, having risen by 48% in the past year, but even removing gas from the equation, inflation still sat at 6.3%—well above the Bank of Canada’s 2% target.
In addition to gas and energy, the cost of food and shelter is also rising quickly—the price of groceries is up almost 10% year-over-year and shelter costs rose 7.4%.
Why it matters: The rate of inflation has been rising quickly for more than a year now, and more expensive basics like food, shelter, and gas are making Canadians poorer.
- Real wages (wages after inflation) fell by 2.8% in the first quarter of the year compared to the same period in 2021.
What’s next: The Bank of Canada has consistently underestimated how quickly inflation would rise and is now playing catch up—they’re almost certain to announce another interest rate hike of at least 0.75% on July 13.
