Canadian inflation hits 29-month high as oil prices rise | Business and Financial Issues

Oil prices are rising by 33.2 percent annually.

Canada’s annual inflation rate rose to a 29-month high in May at 3.2 percent as oil prices rose due to the US-led conflict with Iran that weighed on oil prices.

The release of data by Statistics Canada on Monday marked the first time in nearly two and a half years that inflation in Canada has moved from the Bank of Canada’s one rate to three per cent.

“It’s not good news to see inflation above 3 percent, even for just one month,” Doug Porter, chief economist at BMO Capital Markets, told Reuters news agency.

Monthly inflation rose 1 percent in May, marking the biggest gain in 15 months.

Gasoline prices rose 33.2 percent year-on-year in May. This is the highest since Russia annexed Ukraine, according to Statistics Canada.

The increase was driven by the cost of transportation, which was up 9 percent compared to the previous month.

Total consumer prices rose 2.2 percent due to increases in the cost of food, entertainment, and alcoholic beverages for the year. Food prices went up 3.8 percent in May, led by a 5.3 percent increase in the price of fresh fruit and a 9 percent increase in the price of vegetables.

The inflation rate will not change the Bank of Canada’s assessment of inflation, as it said earlier this month that it sees little evidence that rising electricity prices are causing inflation.

Housing costs rose by 1.7 percent in May following an increase of 1.8 percent in April, the data showed, led by a reduction in mortgage payments, which decreased by 0.2 percent last month.

The rise in inflation comes at a time when rising labor costs are growing as a political challenge for Prime Minister Mark Carney, who promised that he would be able to do it his party won the majority of MPs in April.

Petrol prices, however, are already showing a significant change in June after the peace agreement to end the US-Israeli war on Iran last week between the United States and Iran, which, experts say, will help reduce the number of headlines in June.

“The US-Iran agreement to reopen the Strait of Hormuz has caused oil prices to fall sharply in June, so May may represent a future risk of inflation,” Michael Davenport, a Canadian economist at Oxford Economics, said in a statement given to Al Jazeera, referring to the important Middle East route through which oil comes from around the world.

“There is still much uncertainty about the duration of the ceasefire, and the risk of a rebound in oil prices remains high.”