Canada Inflation Likely Peaked in May, Allowing Central Bank to Hold Rate This Year, CIBC Says

09:15 AM EDT, 06/22/2026 (MT Newswires) -- Canadian inflation picked up again in May, but with oil and gasoline prices down from earlier highs, the latest reading is likely to mark the peak giving the central bank space to hold rates this year, CIBC Economics said after Monday's consumer price index data.

CPI rose 3.2% year-over-year, and was up 1% on a monthly basis and 0.5% on a monthly, seasonally adjusted basis, Statistics Canada said. The headline reading was "a couple of ticks" above the consensus, CIBC said.

"Once again, gasoline was the main source of inflationary pressure, and excluding that one area the year-over-year rate of CPI would have been a much more modest 2.2%," CIBC's senior economist, Andrew Grantham, said in the note.

However, inflation excluding gasoline was stronger than the previous month. Some of the increase likely reflects pass-through from earlier oil price increases, with travel and air transport both returning to positive year-over-year growth, added the bank.

Given the low starting point for core inflation, the Bank of Canada is expected to look through near-term gains and keep rates on hold for the rest of the year, according to CIBC.

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