Higher service prices are cited as the main reason.

On a monthly basis, the index rose 0.6%, while economists had forecast 0.3%, and at the same time exceeded the 0.5% in April.

The two main inflation indicators also increased faster than expected, at an average annual rate of 2.86%, according to the Bank of Canada.

These developments have broken the trend of easing price pressures over the past four months, and may affect the bank’s future decisions regarding interest rates.

“Inflation remains uneven,” said Benjamin Reitzes, macro strategist at the Bank of Montreal.

“While we expect a rate cut in July, the odds have fallen significantly.”

“StatCan’s report doesn’t inspire much confidence in the Bank of Canada,” said James Orlando, an economist at Toronto-Dominion Bank. “One bad episode doesn’t make a difference, but it does show that the road to 2% is uneven.”

Anastasia Chupina