Canada: Headline inflation likely to slip – TD Securities

Sandeep Kanihama FXStreet Contributor

According to analysts at TD Securities, Canada’s headline inflation is set to slip below target with a pullback to from 2.0% to 1.7% y/y in August, with prices down 0.3% on the month.

Key Quotes

“Lower gasoline prices will provide the main catalyst for the deceleration with a 4% decline in the price at the pump, which would contribute to a larger (0.28pp) drag from energy on a year-ago basis. This headwind is set to intensify into 0.4pp by September before base effects from the 2018Q4 collapse in oil prices bring about a rapid recovery on a year-ago basis. “

“With the pullback on headline CPI driven in large part by outsized swings in two components, we do not expect the same impact on core CPI measures that a broad decline in pricing pressures would indicate. The BoC's preferred core metrics are expected to hold at 2.0% y/y on average for August, while the ex. food & energy measure should edge lower to 2.0% from 2.1% y/y.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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