June 26, 2025
SUMMARY
Ontario’s headline inflation was 1.7% y/y in May, up only a tick from April’s 1.6%. Much of the lower inflation was due to dropping energy prices, along with some cooling in shelter and rent inflation. Goods price inflation was slightly negative, while services remained stubbornly above the 2% target.
CONSUMER PRICE INDEX INFLATION
Ontario’s headline inflation sat at 1.7% y/y in May, identical to the national level. The largest contributor to this low reading was the energy component, which plummeted to -13.1% y/y (-15% y/y in April). Much of the energy price relief came from the end of the consumer carbon tax in April and increased supply from oil producing countries. It follows that when excluding food and energy, inflation was higher at 2.5% y/y (note that the Bank of Canada’s core measures of CPI-trim and CPI-median were still at 3% y/y). Services inflation only cooled slightly from 3.5% y/y in April to 3.2% in May. Goods inflation on the other hand was -0.4% y/y, up about half a percentage point from April’s -1%.
Note: CPI-Trim excludes items located at the tail end of the distribution of price changes, thus leaving out the most extreme prices changes (both the top and bottom 20 percent in a given month). CPI-Median follows the reading of the price change right in the middle of the distribution.
A welcome surprise was rent inflation lowering to 3% y/y, down from 5.4% in April and the lowest level since November 2021 (2.3%). This was also lower than the national rent inflation of 4.5% y/y.
Overall Ontario shelter inflation was down to 2.1% (from 3% in April), the lowest since February 2021 (1.7%). Toronto shelter inflation matched the provincial reading at 2.1%.
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FOR MORE INFORMATION, CONTACT:
Ali Ahmad
Research Analyst
Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210 ext. 222
aahmad@iciconstruction.com
