Inflation ticked up to 2.9% in May

Canada's annual inflation rate edged up to 2.9 per cent in May — an increase from 2.7 per cent in April — mostly due to higher prices for services, Statistics Canada said on Tuesday.

Some of the increase was typical of the season. Prices for cellular services, rent, travel tours and air transportation grew at a faster pace, according to the data agency.

Travel tour prices were up 6.9 per cent and air transportation prices up 4.5 per cent from the same time a year prior, both boosted by travel to and from the U.S.

Meanwhile, prices for cell services fell 19.4 per cent in May from a year prior, coming in at a slower pace from April's 26.6 per cent drop.

'Not what the Bank of Canada wanted to see'

«I think what was most surprising about the numbers released today was that we saw an inching up across a lot of categories here that Statistics Canada tracks on inflation. So that's not really great news,» said Pedro Antunes, chief economist at the Conference Board of Canada.

He maintained that the Bank of Canada made the right move in cutting its key interest rate earlier this month.

The central bank cut lending rates from five per cent to 4.75 per cent on June 5, as it attempts to bring inflation down without tipping the economy into a recession. Yet even with a cut, the high rates are still taking away from the economy, Antunes said.

«Let's not kid ourselves, that's still a lot of pressure on households.»

BMO economist Douglas Porter wrote of the May inflation numbers that «this is not what the Bank of Canada wanted to see at this point, and clearly shaves the odds of a followup July rate cut.»

The central bank's preferred measure of core inflation, which strips out volatile sectors like food and energy, was also up in May — more than