The Consumer Price Index (CPI) rose 1.7% on a year-over-year basis in May, matching the 1.7% increase in April, reported Statistics Canada on Tuesday.
Compared with one year earlier, a smaller price increase for rent and a decline in travel tours put downward pressure on the CPI in May. Smaller declines for gas and cellular services put upward pressure on the index compared with the previous month. Excluding energy, the CPI rose 2.7% in May, following a 2.9% increase in April. On a monthly basis, the CPI rose 0.6% in May. On a seasonally adjusted monthly basis, the CPI was up 0.2%, explained the federal agency.
The shelter component grew at a slower pace year over year in May, rising 3.0% following a 3.4% increase in April.
“Prices for rent rose 4.5% on a year-over-year basis in May, compared with a 5.2% increase in April. Rent price growth slowed the most in Ontario, with prices rising 3.0% in May following a 5.4% increase in April. The increased availability of rental units, coupled with slower population growth compared with spring of the previous year, contributed to the slowdown in rent price growth in May. Given the large weight of Ontario nationally, these effects alone were enough to offset faster price growth in seven other provinces,” said Statistics Canada.
“The mortgage interest cost index decelerated for the 21st consecutive month in May (+6.2%) after rising 6.8% in April.”
Gasoline led the decline in consumer energy prices again this month, down 15.5% year over year in May after declining 18.1% in April. Gasoline prices in May remained below May 2024 levels, primarily due to the removal of the consumer carbon levy, noted Statistics Canada.
“In May 2025, prices for gasoline increased 1.9% month over month. The increase was largely attributed to higher refining margins, which were partially due to higher costs associated with switching to summer blends,” it said.
On an annual basis, prices for cellular services fell 5.5% in May, compared with a 10.8% decline in April. On a month-over-month basis, prices for cellular services rose 7.2% in May. The higher prices followed the end of promotions from some wireless service providers, added Statistics Canada.
It also said prices for new passenger vehicles rose 4.9% year over year in May, after increasing 4.6% in April. This faster price growth was primarily driven by higher prices for some electric vehicles.
Katherine Judge, Executive Director and Senior Economist, CIBC Capital Markets, said helping the price slowdown was a cooling in rent prices, something that had already been shown in private industry data for major cities amidst the condo supply surge.
“Food price inflation also slowed after being lifted by counter tariff measures previously. Goods inflation outside of food and energy rose to 0.3% m/m SA, which may be picking up some tariff passthrough. Overall, the moderation in core measures is a step in the right direction for the Bank of Canada and they will want that progress to be maintained in the next report in order to feel comfortable cutting in July,” she said.
Andrew Hencic, Director & Senior Economist, TD Economics, said that after last month’s unpleasant inflation surprise, May’s data came in largely as expected.
“Top line inflation continues to be restrained as the impact of the end to the consumer carbon tax offset changes in energy prices. For core inflation there was good news too, as all four measures cooled amid falling travel tour and rent prices. The ongoing challenges in the housing market (particularly in Ontario) should help to temper further gains in rents in the coming months,” he said.
“After last month’s uptick in core inflation some giveback was expected. The labour market remains soft and tepid domestic demand growth should keep a lid on inflationary pressures. As has been the case this year, the outlook is heavily dependent on how trade negotiations evolve, but we believe that the soft economic backdrop should give the BoC (Bank of Canada) space to deliver two more cuts this year.”
Related Retail Insider stories:
