OTTAWA, June 25 - Canada's annual inflation rate unexpectedly accelerated to 2.9% in May, largely on higher prices for services, while key measures of core inflation edged up for the first time in 5 months, data showed on Tuesday, in an unfavorable reading for July interest rate cut prospects.
The surprise acceleration in headline inflation was driven by price for services including cellular services, travel tours, rent and air transportation, Statistics Canada said. Headline inflation is in line with the Bank of Canada's forecast of 2.9% by the end of the first half of 2024. The bank will have another month of inflation data before its next rate announcement on July 24, when money markets see a nearly 70% chance of a rate cut.
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