Statistics Canada says annual inflation rate in May sinks to negative 0.4 per cent

Statistics Canada says annual inflation rate in May sinks to negative 0.4 per cent

Statistics Canada says annual inflation rate in May sinks to negative 0.4 per cent

OTTAWA — The annual pace of inflation pulled back even further in May due to a drop in gasoline prices compared with a year ago as businesses shut due to the COVID-19 pandemic began to reopen slowly.

Statistics Canada said Wednesday the consumer price index fell 0.4 per cent compared with a year ago, making it the second month in a row for negative inflation after a 0.2 per cent drop for April.

Economists on average expected the consumer price index to remain unchanged compared with a year ago — meaning an annual inflation rate of zero.

Scotiabank deputy chief economist Brett House said April and May were likely the bottom for the Canadian economy.

“We’re not likely to see price pressures decline further going into June, largely because of the stimulus measures or the bridge financing measures that are in place for households and for businesses and the reopening that has begun in the course of the matter part of May and into the month of June,” House said.

Prices rose in four of the eight major components on a year-over-year basis.

Transportation prices contributed the most to the overall decline, mainly because of lower gas prices compared with May last year, though gas prices were up from April. Gasoline prices were down 29.8 per cent compared with a year ago, but up 16.9 per cent from April.

Statistics Canada said that excluding gasoline, the consumer price index rose 0.7 per cent compared with a year ago, the smallest increase since January 2013.

Other contributors to the drop in inflation was a 21.3 per cent drop in traveller accommodation and a 9.5 per cent decline in telephone services.

Meanwhile, prices for passenger vehicle insurance premiums were up 6.4 per cent compared with a year ago, while meat prices were up 7.8 per cent.

The average of the three measures of core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 1.7 per cent compared with 1.8 per cent in April.

The central bank targets inflation when setting its trend-setting interest rate which is 0.25 per cent.

Bank of Canada governor Tiff Macklem told the House of Commons finance committee this week that rates would only go up once Canada is well into an economic recovery, which he suggests is still a long way off.

“But we’re in a deep hole, and it’s going to be a long way out of this hole,” Macklem said Tuesday in his first public appearance since taking the top job at the central bank on June 3.

TD Bank senior economist James Marple said there are promising signals in recent economic data and as economies open up, the bank expects to see some modest lift to consumer prices.

“Still, it will be a long road ahead and downside risks will remain elevated until a vaccine is broadly available,” Marple said.

Going forward, House said economists are going to be watching how the pandemic situation evolves with the number of new cases as well as how the pace of the reopening of businesses unfolds.

“We’re also going to be looking at the pace and progress on reopening and the sequencing of that because there are whole sections of the consumer price basket that are not back to anything close to full activity yet and may not be until well into the end of the year,” he said.

This report by The Canadian Press was first published June 17, 2020.

Craig Wong, The Canadian Press

inflation

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A central Alberta woman is collecting Christmas gift donations for roughly 85 residents at Valleyview Manor in Rimbey. (Jennifer Feinberg/ The Progress)
Rimbey woman gathering Christmas gifts for seniors at Valleyview Manor

Margaret Tanasiuk says she doesn’t want anyone to feel forgotten on Christmas morning

Bids for Kids poster
Wolf Creek Youth Foundation online auction gets ‘overwhelming’ response

Santa’s Bids for Kids auction to benefit youth programs in Rimbey, Ponoka

skip2
Rimbey Christian School students experience the joy of giving

Grades three and four students raised $2,000 for Somalian children

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, confirmed eight additional virus-deaths Monday afternoon including one in central zone. (Photo by Chris Schwarz/Government of Alberta)
New record: Red Deer at 236 active COVID cases

One more death in central zone reported

Janelle Robinson owns and operates Spirit’s Respite Ranch near Stettler. The Ranch, just north of Stettler, is an animal therapy ranch that helps those with special needs and conditions ranging from PTSD to anxiety. Mark Weber/Stettler Independent
Spirit’s Respite Ranch near Stettler provides support through animal interaction

‘I also come from a family of doers - if something that is needed isn’t there, you just figure it out’

Idyllic winter scenes are part of the atmosphere of the holiday season, and are depicted in many seasonal movies. How much do you know about holiday movies? Put your knowledge to the test. (Pixabay.com)
QUIZ: Test your knowledge of holiday movies and television specials

The festive season is a time for relaxing and enjoying some seasonal favourites

Paramedics register patients at a drive through, pop-up COVID-19 test centre outside the Canadian Tire Centre, home of the NHL’s Ottawa Senators, in Ottawa, Sunday, Sept. 20, 2020. A new poll suggests most Canadians aren’t currently worried that people in other countries might get a COVID-19 vaccine first. THE CANADIAN PRESS/Justin Tang
Canadians not worried other countries will get COVID-19 vaccine first: poll

Forty-one per cent of respondents say they want the vaccine to be mandatory for all Canadians

Fossil finds at Mt. Stephen. (Photo: Sarah Fuller/Parks Canada)
Extreme hiking, time travel and science converge in the Burgess Shale

Climb high in the alpine and trace your family tree back millions of years – to our ocean ancestors

Deputy Prime Minister and Minister of Finance Chrystia Freeland listens to a question from a reporter on the phone during a news conference in Ottawa, Monday, Nov. 30, 2020. THE CANADIAN PRESS/Adrian Wyld
Spending too little worse than spending too much, Freeland says as Canada’s deficit tops $381B

‘The risk of providing too little support now outweighs that of providing too much’

Executive Director and Co-Founder of Rock Soup Craig Haavalsen is sleeping in a tent outside Rock Soup’s location until the Go Fund Me for Rock Soup raises $10,000. Shaela Dansereau/ Pipestone Flyer.
Putting normalcy into asking for help: New non-profit sets up in Wetaskiwin

Rock Soup non-profit is a new secular Food Bank putting down roots in Wetaskiwin.

Wetaskiwin Composite High School. Shaela Dansereau/ Pipestone Flyer.
Wetaskiwin Regional Public Schools prepare for transition back to online learning

Grades 7-12 will are mandated to transfer to online learning starting Nov. 30, 2020.

Lawyer Devon Page, Ecojustice Canada’s executive director, pauses during a news conference in Vancouver on Wed., Sept. 26, 2012. The environmental law group has lost its bid to pause Alberta’s inquiry into where critics of its oil and gas industry get their funding. Ecojustice sought an injunction this summer to suspend the inquiry, headed by forensic accountant Steve Allan, until there is a decision on whether it’s legal. nbsp;THE CANADIAN PRESS/Darryl Dyck
Judge tosses application to pause Alberta inquiry into funding of oil and gas foes

Ecojustice sought an injunction in the summer to suspend the inquiry

Janelle Robinson owns and operates Spirit’s Respite Ranch near Stettler. The Ranch, just north of Stettler, is an animal therapy ranch that helps those with special needs and conditions ranging from PTSD to anxiety. Mark Weber/Stettler Independent
Spirit’s Respite Ranch near Stettler provides support through animal interaction

‘I also come from a family of doers - if something that is needed isn’t there, you just figure it out’

A pedestrian makes their way through the snow in downtown Ottawa on Wednesday, Nov. 25, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Wild winter, drastic swings in store for Canada this year: Weather Network

In British Columbia and the Prairies, forecasters are calling for above-average snowfall levels

Most Read