Canada’s annual inflation rate edged up to 3.2 per cent in May, according to Statistics Canada, with soaring gas prices pushing inflation to its highest rate since the end of 2023.

The high cost of gas, driven by an oil shortage due to the war in Iran, was the driving force behind the uptick for another month, according to Statistics Canada. The price of gasoline rose at a faster pace in May, with prices increasing 33.2 per cent on a year-over-year basis, compared to 28.6 per cent in April.

Excluding the impact of gasoline prices, the consumer ‌price index still posted a higher increase of 2.2 per cent in May from two per cent in April, led by the elevated cost of food, recreation and alcoholic beverages.

Prices for fresh fruit rose by 5.3 per cent compared to the same time a year ago, while the cost of fresh vegetables rose nine per cent in May. Tomatoes in particular soared by 45.2 per cent, which the data agency said was due to poor weather and less planting of the crops in Mexico.

The month-over-month increase in vegetable prices of 5.5 per cent was the largest increase since 2008, according to Statistics Canada, and came as a result of reduced supply and higher fuel costs.

The cost of fresh produce drove the rate of inflation for food products overall to 4.3 per cent year over year for the month of May.

Prices for computer equipment, software and supplies, meanwhile, rose 3.9 per cent in May, as the cost of random access memory (RAM) and solid state drives (SSDs) required for computers has increased. Demand from artificial intelligence data centres has resulted in a supply crunch for key computer inputs, according to Statistics Canada.

Analysts polled by Reuters had estimated ​the annual inflation rate to touch three per cent in May, up ​from 2.8 per cent in April.