Ottawa June 27 2023: The Consumer Price Index (CPI) rose 3.4% year over year in May, the smallest increase since June 2021, following a 4.4% increase in April.
The slowdown was largely driven by lower year-over-year prices for gasoline (-18.3%) resulting from a base-year effect. Excluding gasoline, the CPI rose 4.4% in May following a 4.9% increase in April.
The mortgage interest cost index (+29.9%) remained the largest contributor to the year-over-year CPI increase. Excluding mortgage interest cost, the CPI rose 2.5% in May, following a 3.7% increase in April.
On a monthly basis, the CPI was up 0.4% in May, following a 0.7% gain in April. The largest contributors to the month-over-month increase were mortgage interest costs and travel services, which includes traveller accommodation and travel tours. On a seasonally adjusted monthly basis, the CPI rose 0.1%.
Year-over-year decline in energy prices driven by base-year effect
Energy prices fell 12.4% in May compared with the same month a year earlier, when supply uncertainty surrounding Russia’s invasion of Ukraine led to energy prices rising substantially. While this mainly affected the year-over-year price changes for gasoline and fuel oil and other fuels, a decrease in the price of natural gas (-3.5%) also contributed to the energy price deceleration. This was the first year-over-year decline in natural gas prices since August 2020, and it was due, in part, to lower commodity rates.
Gasoline prices fell 18.3% in May 2023 compared with the high prices from May 2022. On a monthly basis, gas prices declined 0.8% after a 6.3% increase in April 2023.
Prices for fuel oil and other fuels also exhibited a base-year effect, falling 36.9% year over year in May following a 14.8% decline in April.
Furniture and passenger vehicles contribute to the deceleration in prices for durable goods
Prices for durable goods grew at a slower pace year over year in May, rising 1.0% after increasing 2.2% in April. The increase in May is the smallest since May 2020 and coincided with easing supply chain pressures compared with a year ago. This was reflected in furniture prices (-2.9%), which fell by the largest amount since June 2020, and in passenger vehicle prices (+3.2%), which showed the smallest increase since February 2021.
Lower prices for cellular services
Year over year, consumers paid 8.2% less for cellular services in May, as a result of lower-priced cellular data plans. This is the largest year-over-year decline since April 2022.
Grocery prices remain elevated, while prices for restaurant food accelerate
Grocery prices rose 9.0% year over year in May. This increase was still more than double the rate of headline inflation and nearly unchanged from the 9.1% increase in April. The highest year-over-year increases among grocery items include edible fats and oils (+20.3%), bakery products (+15.0%) and cereal products (+13.6%).
Prices for food purchased from restaurants rose at a slightly faster year-over-year pace in May (+6.8%) than in April (+6.4%), amid ongoing elevated labour shortages, input costs and expenses, which can disproportionately affect these businesses.
The mortgage interest cost index increases at the fastest pace on record, for the third consecutive month
The mortgage interest cost index rose 29.9% on a year-over-year basis in May following a 28.5% increase in April. For the third consecutive month, this was the largest increase on record, as Canadians continued to renew and initiate mortgages at higher interest rates.
