Fuel and food price hike: Inflation in Canada rises to 3.2 per cent

 

 

Statistics Canada reported that inflation in Canada rose to 3.2 per cent in May, following a sharp increase in the prices of essential goods such as fuel and food. This was an increase of 0.4 per cent compared to April.

The fuel price hike was due to the international shortage of crude oil due to the conflicts in the Middle East and the closure of the Strait of Hormuz. Gasoline prices alone increased by 33.2 per cent compared to last year. Canadians are now paying the highest fuel prices since June 2022. With the increase in fuel prices, airfares have also increased by 7.4 per cent. This is the 16th consecutive month in Canada that food price inflation has been higher than the general inflation rate (an increase of 4.4%). Vegetables increased by nine per cent and fruits by 5.3 per cent. The biggest setback was in the price of tomatoes. The price of tomatoes increased by 45.2 percent in a single year.

Canada mainly depends on Mexico for its tomatoes. But bad weather in Mexico affected the harvest. In addition, farmers reduced their cultivation this year due to uncertainty following the 17% tariff imposed by the United States on Mexican tomatoes. With the decrease in production, tomatoes faced a severe shortage in the market and prices soared. The high freight costs to transport them to Canada during the winter also fueled the price increase.

Although the price increase is a concern, economists point out that the main causes of inflation are outside the country. The inflation rate excluding fuel and food is only 1.6 percent. In addition, it is comforting to note that rent and other housing-related expenses have decreased slightly.