Canadians felt a fresh squeeze on household budgets in May as rising fuel costs drove inflation higher, pushing the annual inflation rate to 3.2 per cent from 2.8 per cent in April. It marks the first time since late 2023 that inflation has climbed above the three per cent mark, raising concerns about the cost of living and its impact on families and businesses.
The biggest contributor to the increase was higher gasoline prices, which continued their upward trend for a third consecutive month. Global energy markets were rattled by tensions in the Middle East and disruptions caused by the temporary closure of the Strait of Hormuz, sending fuel prices sharply higher. Although recent diplomatic efforts have eased some pressure, consumers had already absorbed the impact at the pumps during May.
Air travel also became more expensive, with airlines facing higher jet fuel costs that translated into increased fares. At the same time, Canadians paid more for groceries as food inflation accelerated. Prices for fresh fruits and vegetables rose noticeably, adding further pressure to household expenses.
Tomatoes recorded one of the steepest increases, soaring more than 45 per cent compared with a year earlier. Adverse growing conditions and reduced production in Mexico, linked partly to U.S. trade measures, contributed to the dramatic spike.
The renewed rise in inflation comes at a time when many Canadians were hoping price pressures had finally eased. Economists will now closely watch whether the recent moderation in oil prices and improving global conditions help bring inflation back under control in the months ahead.