Inflation holds steady at 1.7% in May as rent hikes cool

The annual pace of inflation held steady at 1.7 per cent in May as cooling shelter costs helped tame price pressures, Statistics Canada said Tuesday.

Shelter costs rose three per cent in May, StatCan said, marking a slowdown from 3.4 per cent in April.

The agency singled out Ontario as the major source of rent relief in the country. Slowing population growth and a jump in new supply helped dampen rent hikes in May.

Mortgage interest costs meanwhile decelerated for the 21st consecutive month amid lower interest rates from the Bank of Canada.

Economists had broadly expected inflation would remain unchanged heading into Tuesday.

The removal of the consumer carbon price continues to drive down gasoline costs annually, StatCan said, but a smaller monthly decline in prices at the pump from this time last year limited the drop.

The cost of food from the grocery store rose 3.3 per cent annually in May, half a percentage point lower than the hike seen in April.

Lower prices on travel tours and air transportation also dampened inflation last month.

StatCan said the cost of a new vehicle accelerated in May, rising 4.9 per cent annually, thanks in large part to more expensive electric vehicles.

Inflation excluding tax changes – stripping out influences from the carbon price removal – was also steady at 2.3 per cent last month.

Bank of Canada governor Tiff Macklem said last week that the central bank would be paying closer attention to this figure as it tries to look past temporary impacts to see what’s really happening to inflation amid tariffs.

The central bank’s closely watched core inflation metrics meanwhile ticked down a tenth of a percentage point to three per cent in May.

The Bank of Canada’s next interest rate decision is set for July 30.