‘These numbers are bad for Canadians’ | Inflation rises to 3.2% in May

[00:00:00]TV's Annie Bergeron on all of it joins us now with more on the numbers and what's driving them. Good morning, Annie. What do these numbers really mean for Canadians this morning?

[00:00:10]>> Hi, Akshaya. Well, these numbers are bad for Canadians. Essentially, what CPI means is this is showing that inflation is going up and that means that the cost of pretty much everything for Canadians is going up. So, your money's not going as far. What's interesting is as you pointed out, the CPI inflation according to Stats Canada in May was 3.2% and that's actually higher than private sector economists had predicted. Most private sector economists were expecting to see inflation tick up in May to around 3%, which is higher than it was the previous 2 months, but this is even higher than that at 3.2%. And the other big factor here that you pointed out, Akshaya, is even if you take out energy costs, you take out gasoline, CPI is still, you know, going up faster than it had in the previous months. As you point out again, 2.2% instead of 2% in April.

[00:00:54]So, >> [snorts] >> even when you remove that, it is going up. I guess the one good sign that some economists, and particularly the Bank of Canada, would probably point out is [snorts] that when you look at actual core inflation, which is inflation that has everything super volatile stripped out of it, including shelter, for example, and all energy costs, that's actually still the same and remaining unchanged. And that's one of the key factors that the Bank of Canada does look at is where is core inflation, meaning everything else that's less volatile, that's more stable over years, and that seems to be fairly consistent for now. However, these high energy prices are definitely driving things up.

[00:01:29]The big question here that the Bank of Canada is going to have to answer next month is what do they do with the interest rate and is inflation increasing in all sectors because of gasoline or it's not. So, let's just dive a little bit deeper here. If we look into the CPI data, gasoline up 33.2% year-over-year, so substantial.

[00:01:49]Energy overall 22.2%.

[00:01:51]Non-durable goods 7.4%. Food 4.3%. So, we are seeing substantial increases in inflation. There were a couple areas that we saw some reductions, although barely. If you look at overall shelter costs, they were up, but uh only a little bit less than they were in April. So, I guess that's a good sign. Mortgage interest rates were also down 0.2% because we are seeing some interest rates starting to come down.

[00:02:17]Now, overall, where does this go? I know I've been talking a lot. I'm almost done. Um what we have seen is that oil prices, energy prices, jet fuel have come down since the peak. And there are signs, if you look at the stock markets, that those prices are starting to drop after this memorandum of understanding was signed around the Strait of Hormuz and allowing tanker bans allowing tankers to go through again. So, there are some signs that these high energy prices are coming down. And so, a lot of economists are now asking the question, are the oil prices, the energy prices going to start coming down substantially enough that inflation starts to go back to where it was several months ago, or are those prices now kind of baked in, which means that the overall costs of the good have already started to go up? And so, that's really the big question, I think, that economists and the economy sort of have to grapple with now, Akshay.

[00:03:04]>> And you know what, you've covered it all in that one answer. So, thank you so much for joining [laughter] us this morning for breaking it all down. That's it.

[00:03:10]>> a lot, so fair.

[00:03:12]>> That was awesome. So, Divya Annibale and Oliver, thank you for this, Annie.