Canada: Headline CPI likely to firm to 2.0% in April - TDS


Analysts at TD Securities are looking for the Canada’s headline CPI to firm to 2.0% y/y in April, leaving inflation at target for the first month since December.

Key Quotes

“Our forecast is consistent with a 0.4% m/m increase, in line with the market consensus, helped by a broad pickup in energy prices on the heels of the federal carbon backstop imposed on Ontario, Saskatchewan, Manitoba and New Brunswick on April 1st. This set the price for carbon emissions at $20/tonne and pushed gasoline prices higher by 4.4 cents per litre, contributing to another 10% m/m increase in the price at the pump following an 11.6% gain in March.”

“The combination of carbon taxes alongside seasonal fluctuations and a pickup in oil prices briefly pushed average gasoline prices above their Q4 highs to $1.35 on April 29, just five cents shy of the record from 2014.”

“Looking past energy prices, we expect CAD depreciation to provide a tailwind to food products while ex. food and energy prices should see a soft 0.1% increase (0.2% seasonally adjusted); BoC measures of core inflation are likely to hold at 2.0% on average.”

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