Preview: Due August 17 - Canada July CPI - Slightly firmer on energy but with stable core rates
We expect July Canadian CPI to correct higher to 2.9% yr/yr from June’s 2.8% which slipped significantly from May’s 3.2%, on a modest increase in gasoline prices after a sharp fall in June. However, we expect the Bank of Canada’s core rates to be unchanged from June, with CPI-Median at 1.9%, CPI-Trim at 1.8%, and CPI-Common at 2.6%.
On the month we expect CPI to rise by 0.2% seasonally adjusted with a 0.1% increase ex food and energy. Before seasonal adjustment the monthly increases are likely to be stronger, we expect by 0.4% and 0.3% respectively.
The seasonally adjusted ex food and energy rate has seen two straight 0.3% gains after four straight months no higher than 0.1%. The economy regained momentum in Q2, but June’s ex food and energy gain was not broad based, with the details mostly subdued outside a 0.6% increase in recreation, education and reading. That was probably lifted by the World Cup, particularly air fares and traveller accommodation. With the World Cup leaving Canada in early July, July’s data is likely to be slower.
We expect the yr/yr ex food and energy rate to be unchanged at 1.8% with the year ago data dropping out also having been subdued, but this is not one of the BoC’s three core rates. There we expect monthly gains of 0.1% in CPI-Median and CPI-Trim, which would leave yr/yr rates unchanged at June’s respective softer paces of 1.9% and 1.8%. We also expect CPI-Common to remain at June’s 2.6% yr/yr pace.
