canada april cpi - preview
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- Annual Rate Set to Climb To 2.0pct

- Fuel Costs to Boost Inflation

 

LONDON, 15 May (LS NEWS) – Wednesday’s release of April’s Canadian headline consumer price index (1230 GMT) is expected to show a rise to 2.0pct thanks to a jump in gasoline prices, which is estimated to result in a 0.4pct rise m/m.

 

The annual inflation rate edge up to 1.9pct in March from 1.5pct in February. However, the March rate was just below the Bank of Canada’s 2.0pct target for the third successive month.

 

Two out of the three of the central banks’s measures of core inflation, median and trimmed, ticked up into the 2.0pct range, though CPI common, which the bank says is the best gauge of the economy’s underperformance, remained at 1.8pct in March.

 

CPI median, which shows the median inflation rate across CPI components, increased to 2.0pct, while CPI trim, which excludes upside and downside outliers, ticked up to 2.1pct.

 

The BoC, which has put interest rate hikes on hold as the economy slows, dropped its hawkish bias in favour of a neutral outlook at its most recent meeting: “We will continue to evaluate the appropriate degree of monetary policy accommodation as new data arrive.”  

 

The bank said CPI inflation “will likely dip in the third quarter, largely because of the dynamics of gasoline prices, before returning to about 2pct by year end.”  It went on to say that it forecasts inflation to remain “around 2pct through 2020 and 2021”.

 

Analysts at TD Securities are looking for the headline figure to tick up to 2.0pct y/y, which would leave inflation at target for the first time since December. “Our forecast is consistent with a 0.4pct m/m increase, helped by a broad pickup in energy prices on the heels of the federal carbon backstop.”

 

Scotiabank said gasoline prices probably added “around two-tenths to headline CPI inflation in year-ago terms on top of single-handedly driving CPI up by at least 0.3pct m/m.” Overall, they expect inflation to stay in the mid-point of the Bank’s 1-3pct target range and to remain little changed over the coming months.

 

--- Jamie Dutta

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