Statistics Canada reported that Canada’s annual inflation rate accelerated in April, which was widely expected as the conflict in the Middle East continues to push up the price of oil. Canadians are now facing the highest rate of inflation since May 2024. The good news is that headline inflation was lower than expected in April, suggesting higher energy costs have not yet had a significant impact on prices in other sectors of Canada’s economy. Still, the risks of more broad-based inflationary pressures persist.

• The annual inflation rate in the UK fell to 2.8% in April from 3.3% in March. This was the lowest rate of annual inflation in the UK since March 2025.
• The decline came in response to a marked slowdown in household services costs. The Energy Regulator introduced an energy price cap at the beginning of April. This slowdown offset the sharp increase in motor fuel prices.
• A final estimate showed Europe’s annual inflation rate picked up to 3.0% in April, which was its highest level since September 2023.
• Energy prices in Europe rose by 10.8% year over year in April, which was its biggest increase since February 2023.
• Higher inflation is having an impact on other areas of the global economy. In the US, the rate on a 30-year fixed-rate mortgage rose to 6.56% over the week ended May 15. Higher inflation has raised expectations the US Federal Reserve Board might need to lift interest rates this year.

Data keeps showing that the conflict in the Middle East has pushed consumer and industrial prices higher, particularly for energy prices. The global supply of oil has become a major concern for economies around the world. In Canada, for instance, scheduled flights have been suspended over jet fuel costs. Europe has stated its concern about a developing shortage of jet fuel.

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