Canadian headline inflation likely to have eased in August
Source: FxWire Pro - Commentary / 20 Sep 2018 15:48:51 America/New_York
Canadian August consumer price index data is set to be released tomorrow. According to a TD Economics research report, the headline inflation is likely to have slowed to 2.5 percent in August after reaching 3 percent in July. July’s spike was mainly due to upswings in airfares and slightly because of travel tours and telephone services. A considerable correction in airfares is expected, as the recent methodological change is likely to introduce more volatility to the index.
This should lead to an overall 0.4 percent fall in prices on the month. Energy prices are also a net negative this month, driven by lower gasoline prices, and there is a scope for a moderation in food prices. So far price impacts from Canada’s retaliatory tariffs have been negligible, but the categories to watch are food items, household appliances, personal care products and vehicles.
“Our forecast implies exclusion-based core indexes (CPIX and CPIXFE) to slow this month, with the latter falling back to 2% or below. We expect the BoC core measures to remain near 2.0% on average. Looking ahead, despite the July upside we continue to expect a moderation toward 2.0% through year end”, added TD Economics.
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