The significant drop in the inflation rate last month is a good sign but it is one data point, not a trend, especially in Saskatchewan.
The national rate fell below 3.5 per cent last month and is starting to close in on the Bank of Canada’s target range of two to three per cent but we should not be expecting inflation-fighting interest rates to start dropping anytime soon.
Here are the flies in the ointment on this report.
The drop is largely the result of falling fuel prices. Grocery prices are still high – up nine per cent over the same time last year – and remain far from the target range. We are just now starting to see the impact of higher interest rates on mortgages as the number of renewals with rising payment levels begins to increase.
Here in Saskatchewan, we were on a slightly different track than the rest of the country. At 4.3 per cent inflation in May, we had the highest inflation rate among the provinces. But our rate was unchanged for the month, which stood up pretty well nationally.
