Canadian Inflation (May 2026)

Canadian prices, as measured by the Consumer Price Index (CPI), rose 3.2 per cent on a year-over-year basis in May, following a 2.8 per cent increase in April. On a seasonally adjusted monthly basis, the CPI was up 0.5 per cent in May, equivalent to a 5.9 per cent increase on an annualized basis. The CPI ex-gasoline increased by 2.2 per cent in May, up from 2.0 per cent in the previous month. Additionally, food prices overall increased by 3.8 per cent year-over-year, up from 3.5 per cent in April. In BC, consumer prices rose 2.9 per cent year-over-year in May, up from 2.5 per cent the month prior. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, remained at 2.1 per cent and 2.0 per cent year-over-year, unchanged from April. 
 
May’s print comes as no surprise, with upward pressure on headline inflation being driven by higher gasoline prices from the ongoing supply shock stemming from the Iran conflict. However, prices also rose across some non-volatile components, with the CPI excluding gasoline climbing from the previous month. Moreover, 3-month annualized core inflation has risen over the past few months to 2.3 per cent, above the Bank of Canada’s desired target of 2 per cent. Nonetheless, we largely expect the Bank to continue looking through the oil price shock and hold its policy rate at 2.25 per cent through 2026 as they hope for growth to retrace towards their projections in the second quarter.