Canada’s annual inflation rate was reported to have risen further in May to 3.6% based on a report released by the Department of Statistics on Wednesday. This is a consecutive increase over the past few months.
Based on the survey, analysts predict that interest rates will hit a reading of 3.5% per annum in April, up 0.1% from the April reading of 3.4%. In other words, the May reading recorded an increase of 0.2% compared to the previous month in April.
Core inflation, which does not take into account food and energy prices, rose to 2.8% per annum and far exceeded analysts' expectations of only 2.4%.
According to the Department of Statistics, previously inflation was affected due to a large drop in prices at the beginning of the Covid-19 outbreak, thus affecting the rate of consumer inflation from year to year.
This increase in inflation did not cause much reaction among the market. The USD/CAD pair has been trading between the range of 15-20 pips since the opening of the European market. So far USD/CAD is trading at the price level of 1.2182.
The market is still waiting for more indications from the Central Bank of Canada on the policies to be implemented. Market focus shifted to the Fed’s meeting early this Thursday morning.
