06/23/2017 09:03 EDT | Updated 06/23/2017 09:03 EDT

Canada's Inflation Rate Slows To 1.3% On Weak Gas Price Growth

Electricity and Internet service are among the items coming down in price.

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OTTAWA — Canadian inflation eased up on the accelerator last month as weaker year-over-year growth in gasoline prices helped slow the annualized rate to 1.3 per cent.

Statistics Canada says the May inflation rate was also lower than April's reading of 1.6 per cent because prices declined in categories such as electricity, bakery products and Internet access services.

The agency says year-over-year gasoline prices rose 6.8 per cent in May after climbing 15.9 per cent in April.

Statistics Canada

But despite its slower price growth, the report says gasoline still remained one of the biggest upward contributors to inflation last month, along with other costs associated with shelter and transportation.

The data was released as the economy strengthens and the central bank prepares to make a scheduled rate announcement on July 12.

Statistics Canada

Last month's smaller inflation number could weigh on the Bank of Canada's decision, as the rate moved further away from its ideal target of two per cent.

The latest consumer price index also shows lower readings for two of the Bank of Canada's three preferred measures of core inflation, which the central bank will scrutinize ahead of next month's interest-rate decision.

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