Canada’s main stock index fell on Wednesday as falling commodity prices weighed on resources shares, while hotter-than-expected domestic inflation data added to fears of aggressive interest rate hikes.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 253.25 points, or 1.3 percent, at 19,004.04.

“What we’re seeing is that commodity prices are pulling back and that’s dragging down resource stocks,” said Colin Cieszynski, chief market strategist at SIA Wealth Management.

The energy sector tumbled 5.4% as the prospect of slower economic growth weighed on oil prices. U.S. crude futures settled down 3 percent at $106.19 a barrel.

Materials stocks, which include precious and base metals miners and fertilizer companies, fell 2.3 percent as copper prices fell to their lowest level in more than a year.

The energy and materials industries together account for 31% of the Toronto market.

Heavier-weighted financials were also dragged down, down 1.2%.

Canada’s annual inflation rate accelerated to 7.7% in May, a pace not seen since January 1983, driven by expensive gasoline.

“It just adds to the evidence that the Bank of Canada may need to accelerate rate hikes,” Cieszynski said.

Money markets expect the Bank of Canada to raise interest rates by three-quarters of a percentage point at its next policy announcement on July 13, the largest rate hike in 24 years.

The TSX was on track to drop 13.2% in the second quarter, which would be its biggest quarterly drop since March 2020.

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