James Smith, Developed Markets Economist at ING, suggests that they expect Canada’s headline inflation to come in at 2.8% year on year, a mild slowdown from July’s 3% bumper figure.
Key Quotes
“July was the first month that could have seen President Trump's administrations' tariffs push up Canadian prices, but in the end, we didn’t see any signs of this. And barring any substantial increase in this trade war spat, between the US and Canada over the coming weeks, we expect headline CPI to drift back towards target in early 2019 gradually.”
“What really matters for the Bank of Canada is core inflation, and here the news has been pretty good. All three of the Bank’s main measures of core prices are floating around the 2% target. These are likely to come under some upward pressure as the effect of the increase in minimum wages translate into higher prices. The slightly weaker Canadian dollar may also add some impetus.”
“This makes it likely that we’ll get another rate hike from the Bank of Canada in October, although as ever the odds really hinge on Nafta progress.”
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