Economy shows resilience as inflation reaches 2.5% and retail sales grow
OTTAWA — The Canadian economy displayed its staying power in a pair of reports Friday that showed a spring boost in retail sales and inflation at its fastest annual pace in more than six years.
Inflation accelerated last month to an annual clip of 2.5 per cent, up from a 2.2 per cent reading in May, said Statistics Canada’s latest consumer price data. The growth was driven by higher energy prices, especially gasoline.
A separate release showed retail trade expanded by two per cent in May, thanks to stronger sales at vehicle and auto parts dealers as well as gas stations. It marked a rebound from April, when sales contracted by 0.9 per cent.
Analysts said the resilient numbers will likely give the Bank of Canada confidence to continue along its interest rate-hiking trajectory — and could mean another increase sooner than previously expected. The central bank raised the trend-setting rate last week to 1.5 per cent, for its fourth increase over the past year.