Canada CPI Accelerates to 3.2% as Gasoline Prices Extend Surge

Canada’s May CPI accelerated to 3.2% year over year from 2.8%, beating the 3.0% consensus and signaling firmer inflation pressures. The surprise was driven mainly by another sharp jump in gasoline prices, with fuel costs up 33.2% YoY as Middle East supply disruptions kept energy markets tight. Inflation also broadened beyond fuel, as CPI excluding gasoline rose to 2.2% from 2.0%. Core measures were mixed but generally steady: CPI median held at 2.1% and trimmed mean at 2.0%, while CPI common rose to 2.7%, above expectations. The report is hawkish for the Bank of Canada and could support the Canadian dollar by reducing expectations for near-term rate cuts, especially if investors view the inflation pickup as persistent rather than temporary.