Everything You Need to Know on Wednesday: Inflation Heats up Again, Casting Doubt on Bank of Canada Rate Cut in July

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,305.30, down 0.22%

● Inflation heats up again, casting doubt on Bank of Canada rate cut in July

● Shell to build carbon capture, storage projects in Canada

● Stocks to watch: WestJet

Today, the Canadian dollar is trading at 73.13 cents US, a slight decrease from Tuesday.

S&P/TSX 60 Index Standard Futures are trading at 1,305.30, down 0.22% from previous close.

Inflation accelerated in May by 2.9 per cent on a year-over-year basis, according to Statistics Canada, which will surprise economists who were expecting it to ease from the 2.7 per cent increase in April.

Services costs were the biggest contributor to the uptick in the consumer price index (CPI), with prices rising 4.6 per cent last month, following a 4.2 per cent increase in the month of April, driven mainly by faster price growth in cellphone services, travel tours, rent and air transportation.

Grocery prices slightly rose by 1.5 per cent year over year, up from the 1.4 per cent increase in April, and showed their first acceleration since June 2023. Grocery prices also rose on a month-over-month basis by 1.1 per cent, primarily due to price increases for fresh vegetables, meat, fresh fruit and non-alcoholic beverages.

Shelter prices also accelerated on a monthly basis, rising by 0.4 per cent in May from April. On a year-over-year basis, they rose 6.4 per cent. Mortgage interest costs remain the No. 1 contributor to inflation, rising 23.3 per cent year over year, followed by rent at 8.9 per cent.

Prior to Tuesday’s release, economists predicted inflation would ease last month, leaving room for multiple rate cuts by the Bank of Canada this year. The latest data may curb those expectations.

“Canadian central bankers said they wanted to see more of the same, but that’s not what they got in today’s inflation numbers,” Jimmy Jean, chief economist at Desjardins Group, said. “In contrast to expectations for a muted 0.3 per cent increase, headline prices rose 0.6 per cent in May.”

In addition to the Polaris, the company said it has made a final investment decision to proceed with the Atlas Carbon Storage Hub in partnership with ATCO EnPower. The first phase of this hub will provide permanent underground storage for CO2 captured by the Polaris project.

The company said both projects are expected to begin operations toward the end of 2028.

WestJet says it faces a possible strike by its mechanics starting as early as Friday.

The airline says the Aircraft Mechanics Fraternal Association has issued a strike notice that could mean a work stoppage as early as 5:30 p.m. (MT) on Friday.

The notice comes after the union called off its strike plans last week and returned to the negotiating table.

WestJet says it will start taking action in the coming days to manage the impacts of the possible job action.

The airline cancelled dozens of flights last week before contract talks resumed.

Union members voted overwhelmingly to reject a tentative deal earlier this month and have voiced opposition to WestJet's request for arbitration.