It stings

A single day after Cow Man told us on this blog a food crisis is coming, we heard about the tomatoes.

This morning the bad news hit. Inflation – which not so long ago was 1.8% – is now 3.2%. More than the economists predicted. Above the central bank’s target. And along with gasoline, food was at the heart of the jump.

Led by the red fruit. Or are tomatoes veggies? (Apparently this is a real debate. Scientifically, they’re fruit. Culinarily they are vegetables. Ether way, they’re expensive.)

Whatever they are, they cost 45% more now than a year ago. Trump imposed veggie tariffs on Mexico, so farmers there produced fewer of them. That led to supply shortages, exacerbated by lousy growing conditions. Voila.

The cost of living, officially, went up 3.2% last month compared with May of 2025. Just two months ago inflation was almost a full 1% less, so this is a big deal. But we all know why. The failed, pointless, costly Iran war created a global energy crunch which pushed fuel prices skyward and accounted for the bulk of the CPI hike. Without energy or food, we’re told the index would be a sedate 2%. But life without eating or streaming dog videos on TikTok would be cruel, so sucks to that.

An equally interesting point is inflation would actually be higher in Canada without real estate. The sagging housing market has been making life more affordable, say the feds. Property valuations are lower by as much as 8% over the past year alone. New home prices are off 2.5% with another big drop expected next month (as the HST is removed). And appliances are cheaper (off almost 6%) since real estate sales have tanked.

The big news here is two-fold: bank economists say this spike in prices is temporary (seriously – they have expense accounts) and, secondly, interest rates are unlikely to rise as a s result.

“May’s heavy headline reading stings somewhat,” admits BMO’s Douglas Porter. “However, the reality is that core remains essentially right on target, and the recent big pullback in oil prices—if sustained—will deliver some important relief on headline readings in coming months.”

Across then street, at CIBC headquarters, Andrew Granthm agrees. “Canadian inflation accelerated more than consensus expectations in May but, with oil and gasoline prices now well off their previous highs, this should prove to be the peak and as such viewed as old news,” he says.

Old news, maybe. But most people feel inflation is a huge negative in their lives. Recent polling shows 66% of Canadians list rising consumer prices as their greatest worry – ahead of jobs, housing or the economy in general. After all, you need only look at the combined toll of property taxes, insurance premiums and utility bills to grasp that. Even folks with paid-for homes are feeling it. Those with mortgages, car loans and kids – who insist on eating and may actually like tomatoes – are in the crosshairs.

Economist Grantham says the headline number may have peaked at 3.2%, but there’s more to come. “Core measures of inflation are likely to accelerate modestly further in the months ahead,” he wrote in this morning’s report. But despite the news, our central bank is not going to risk hiking rates to cool things off. Better to suffer some crazy-priced fruit/veggie orbs than a job-sucking recession.

Meanwhile once Trump is done with MIGA (Making Iran Great Again) it’s likely he will diss Canada since we’re importing cheap Chinese EVs and embracing Europe. The trade talks to renew our North American agreement may go badly, and tariff costs could increase as a result. Until the US midterm elections in November, the president is still an unchecked rogue leader.

So many reasons to stay invested, and to steadily convert savings into investments. The Trump era will start to wind down in five months with most economists expecting fewer wars, less mayhem, reduced machismo and the creeping spread of economic stability. Meanwhile the tech/AI revolution continues with profits, productivity and equity values swelling. Mr. Market has performed sturdily through this mess. Even better days lie ahead.

By the way, it’s fruit.

About the picture: “I’m struggling to put into words my gratitude for the positive impact you’ve made on my financial well-being, so instead of stumbling over words, here are a couple photos of my dog Lizzy, 10,” writes Kevin, in Nanaimo. “This big girl is living her best life on hikes with her pack out here on Vancouver Island. Cheers to you and all the best in your recovery.”

To be in touch or send a pcture of your beast, email to ‘[email protected]’.

Source: https://www.greaterfool.ca/2026/06/22/it-stings/