The increase in the headline CPI inflation rate to an eight-year high of 3.7% in May, from 3.3%, and the pick up in the core inflation rate to a seven-month high of 1.8%, from 1.6%, will no doubt prompt claims that the Bank of Canada is "behind the curve" and needs to raise interest rates urgently. However, the latest drop back in energy prices suggests that headline inflation has now peaked and the indirect tax hikes in the second half of last year are still boosting the core inflation rate by about 0.5%.