Inflation Surges to 7.7% in Canada, Fastest Pace Since 1983

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Consumer price inflation accelerated to a four-decade high, adding pressure on the Bank of Canada to deliver more aggressive interest rate hikes in coming weeks, Bloomberg News reported. Annual inflation rose to 7.7% last month, up from 6.8% in April, Statistics Canada reported Wednesday in Ottawa. That’s the highest since January 1983 and well above economist expectations for a 7.3% increase. The inflation gauge rose 1.4% from a month earlier with gasoline, hotel rates and cars among the largest contributors to the gains in May. The average of core measures -- often seen as a better indicator of underlying price pressures -- rose to 4.73%, a record in data back to 1990. Benchmark Canadian two-year yields dropped as low as 3.260% amid a global rally in government bonds. The Canadian dollar pared losses to trade at C$1.2940 per U.S. dollar as of 11:25 a.m. Wednesday’s report illustrates the urgency for Governor Tiff Macklem to quickly withdraw stimulus from an overheating economy amid concern price pressures are becoming entrenched in the economy. The numbers show an acceleration of price pressures, coupled with a broadening of inflation into other goods and services -- a trend that is narrowing the central bank’s ability to maneuver the economy into a soft landing. Read more.