The Globe and Mail reports in its Thursday, June 17, edition that Canada's annual inflation rate is heating up.
The Globe's Matt Lundy writes that Statistics said Wednesday the Consumer Price Index rose 3.6 per cent in May from a year ago, up from a 3.4-per-cent gain in April. That matched what analysts were expecting. Price growth accelerated in nearly all major product categories.
Mr. Lundy says the durability of inflation is perhaps the biggest source of debate in economics today. U.S. Federal Reserve chairman Jerome Powell said Wednesday that "inflation could turn out to be higher and more persistent than we expect," on account of supply issues. As part of Wednesday's rate decision, the Fed is now signalling two rate hikes by the end of 2023, pulling forward its timeline.
The Bank of Canada has repeatedly played down inflation concerns.
TD economist James Marple, however, says: "We're past the heating up stage now. Inflation in Canada is hot."
BMO analyst Benjamin Reitzes says it is "too early to say whether firmer inflation is here to stay." He says, "The persistent strength is likely making the BOC a bit less comfortable with its extremely accommodative monetary policy."
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