Canada inflation rises to highest level in a decade

OTTAWA — Canadians paid 3.6 per cent more for goods and services in May than a year earlier, marking the largest yearly increase in a decade, the government statistical agency said on Wednesday.

Statistics Canada said low interest rates and rising consumer confidence — as vaccine rollouts picked up speed and public health restrictions started to be eased — helped fuel growing demand for durable goods.

Inflation, it said, was led by rising housing costs and passenger vehicle prices, while gasoline, furniture and beef prices continued to bounce back from a steep plunge in May 2020 at the onset of the pandemic.

The cost of buying a home rose 11.3 per cent in the month — the largest yearly increase since 1987. Real estate prices have risen in each of the last 16 months amid higher construction costs and shifting consumer preferences with more people now working from home.

"Over the course of the COVID-19 pandemic, Canadians have sought out more living space and outdoor amenities, as they have adapted to spending more time at home," Statistics Canada said.

Passenger vehicle prices were up partly due to supply chain woes related to a global shortage of semiconductor chips, while gasoline prices rose at a slower pace than in April.

Furniture prices also grew in May at a rate not seen since 1982.