Headline inflation climbed to 3.2% in May, its fastest pace since December 2023, pushing the Bank of Canada to raise its 2026 inflation forecast even as it cut its 2026 growth forecast to 0.7% from 1.2%. The Bank attributes the jump largely to Middle East conflict driven gasoline prices layered on a domestic recovery it still sees broadening, and Governor Tiff Macklem called the mix the best economic news of the year despite the higher headline number.
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