Inflation in May was 3.4 per cent compared to one year ago, the smallest increase in the price of goods and services since June 2021 and down one percentage point from April.
Canadians still paid more for gas, groceries, eating out, and passenger vehicles in May, but the rate of increase slowed.
Statistics Canada said much of that deceleration is due to lower gas prices. They dropped 18.3 per cent from May 2022, just before they reached an all-time high the following month.
Inflation, discounting gas, was 4.4 per cent, half a percentage point lower than in April.
Driving last month's increase was mortgage interest rates. Without that factor, the inflation rate would have been 2.5 per cent.
Following repeated increases in the Bank of Canada's key lending rate, Canadians paid 29.9 per cent more on their mortgages than 12 months ago.
The Bank of Canada could announce another hike on July 7. Earlier this month, the bank hiked the overnight and deposit rate to 4.75.
Buying groceries continues to wallop Canadian wallets. Consumers paid 9 per cent more overall than a year ago. The price of edible fats and oils rose 20.3 per cent, bakery goods rose 15 percentage points, and cereal by 13.6 per cent. However, the increase was slightly less than April's 9.1 per cent for groceries bought at a retail store.
Eating out also cost 6.8 per cent more in May than a year ago. Labour shortages and higher input costs continue to drive menu prices up.
Canadians paid 2.9 per cent less for furniture, while passenger vehicles cost 3.2 per cent more. Cheaper cellular service plans also brought those prices down 8.2 per cent.
The agency's Consumer Price Index report cautions readers that performance now continues to be influenced by record-high inflation one year ago when prices were on an upward trajectory because of the Russian invasion of Ukraine, weakened supply chains, and pent-up demand from the pandemic. Inflation in May 2022 was 7.7 per cent and peaked one month later at 8.1 per cent.
Compared to other G7 nations, Canada's rate last month was the second lowest. Only Japan had lower inflation at 3.1 per cent. Italy had the highest at 7.6, followed by the United Kingdom's 6.5, 6.1 per cent in Germany, 5.1 in France, and 4 per cent in the United States.
