Canada's annual inflation rate surged to a 29-month high of 3.2% in May, driven by a spike in petrol prices amid heightened tensions between the US regime and Iran.

Statistics Canada reported Monday that this marks the first time in nearly two and a half years that headline inflation has moved outside the Bank of Canada's target range of 1% to 3%. Economists expressed concern even if the breach is temporary.

"It's never good news to see the overall inflation rate track above three percent, even if it is for one month only," said Doug Porter, chief economist at BMO Capital Markets, to Reuters.

Monthly inflation jumped 1% in May, the highest gain in 15 months. Petrol prices soared 33.2% year-on-year, the largest increase since Russia's invasion of Ukraine. Transportation costs rose 9% from the previous month.

Food prices increased 3.8% annually, with fresh fruit up 5.3% and vegetables up 9%. Shelter costs rose 1.7% in May, slightly down from 1.8% in April, as mortgage costs edged down 0.2%.

The rising cost of living poses a political challenge for Prime Minister Mark Carney, who pledged to tackle affordability after his party won a parliamentary majority in April.

However, petrol prices have reversed sharply in June after an interim peace deal between the US regime and Iran to reopen the Strait of Hormuz. "May will likely represent the near-term peak for headline inflation," said Michael Davenport, senior Canada economist at Oxford Economics, though he warned of uncertainty over the ceasefire's durability.

Source: www.aljazeera.com