Canadian CPI Preview: Forecast from five major banks, inflation to cool

Statistics Canada will release November Consumer Price Index (CPI) data on Wednesday, December 21 at 13:30 and as we get closer to the release time, here are the forecasts by the economists and researchers of five major banks regarding the upcoming Canadian inflation data.

Headline is expected to have eased in November from 6.9% year-on-year in October. If so, this would be the lowest since February and would continue the deceleration from the 8.1% peak in June. 

TDS

“We look for CPI to edge 0.1pp lower to 6.8% as softer energy prices hold the headline index to a 0.1% MoM gain. Food prices should bounce back from last month, while rents and mortgage interest costs will provide another large contribution for shelter. Core inflation will also remain in focus with CPI-trim/median expected to soften by 0.1pp on average.”

RBC Economics

“CPI growth likely edged down to 6.7% YoY. Though that’s still very high, it nevertheless marks another drop below the measure’s 8.1% peak in June.”

NBF

“Lower gasoline prices, combined with expected weakness in the goods sector, should have weighed on the headline figure, offsetting sustained price pressure in the service segment and translating into a 0.1% monthly decline for the headline index. If we are right, the 12-month rate should drop four ticks to 6.5%. While we expect only modest gains for core measures on MoM basis, a positive base effect should prevent any decline in the 12-month rate, with CPI-median moving up one tick to 4.9% and CPI-trim remaining unchanged at 5.3%.”

CIBC

“After increasing in the prior month, gasoline prices dropped throughout November and will be the primary factor holding CPI to a muted 0.2% monthly increase. That would see the annual rate tick down, albeit only slightly, to 6.8%. Some positive signs of an easing in goods prices within the US CPI data could also show up in the Canadian data. However, food price inflation appears to have remained stubborn, and rising rates will continue to impact the mortgage interest payment part of the inflation basket.”

Wells Fargo

“The CPI rose at 6.9% YoY in October, and taking a closer look at the details, price gains for gasoline and mortgage interest costs were offset by softer food inflation. Commodity prices have come down from their peak, which may provide some relief on the headline inflation front. In November, we expect CPI inflation trended lower to 6.4% YoY.”