Gasoline pushes up inflation, core pressures remain; June data may show a turning point
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- The rise in gasoline prices became the main driver pushing up Canada's May CPI. Even after excluding this factor, core CPI still increased by 2.2% year-on-year.
- Gasoline prices themselves surged by 33.2% year-on-year in May, higher than April's 28.6%. However, this trend has now reversed, and data for June are expected to fall significantly.
- The increase in oil prices has triggered secondary effects. In May, airline transport prices rose by 7.4% year-on-year, compared to a 1.7% year-on-year decrease in the previous month, and grew by 6.7% compared to April.
- Housing costs continue to act as a drag. The replacement cost for owner-occupied housing fell by 2.5% year-on-year and by 0.3% month-on-month, becoming the main restraining factor in the inflation data.
- Overall, energy prices significantly pushed inflation higher in May, but core pressures remain. With gasoline price trends reversing, the market is watching to see if June's data can ease inflation concerns.
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