By Thomas I. Likness
EBC Edmonton Bureau

EDMONTON (Eagle News) — For the second straight month, Canada’s inflation rate has dropped and remains in the negative zone. Statistics Canada pegged the rate for May at -0.4% on Wednesday.

Lower gasoline prices pushed the rate down, although fuel prices have begun to rise. Also cheaper than a year ago were travel accommodations, telephone services, electricity and women’s clothing.

Items that went up include meat, restaurant food, mortgage interest costs and car insurance.

The category with the biggest increases in the Consumer Price Index (CPI) is food.

“Food is still the fastest-rising category in the CPI basket, and it’s one that many Canadians are spending a larger-than-normal share of their income on at present,” an economic report by the Royal Bank of Canada noted.

Rent inflation continued to slow from last year’s multi-decade high, telephone service prices are falling at a record rate, and the cost of travel services was down sharply.

“Services disinflation should become less intense as the economy continues to reopen and businesses regain some pricing power,” the bank noted. “However, we expect an ongoing shortfall in demand will make for a slow return to the Bank of Canada’s 2% inflation target.”

(Eagle News Service)