Canada September CPI - Not alarmingly strong but argues against BoC easing next week
September Canadian CPI at 2.4% from 1.9% yr/yr is stronger than expected with the Bank of Canada’s Bank of Canada’s core rates also mostly marginally firmer. The monthly details do not look alarmingly strong but, particularly after a strong employment report, the data argues against a BoC easing as soon as next week’s meeting.
The BoC’s core rates show CPI-Median unchanged at 3.2% but August was revised up from 3.21%. CPI-Trim increased to 3.1% from 3.0% and CPI-Common increased to 2.7% from 2.5%. The core rates are stronger than the headline which is still restrained by around 0.7% due to the abolition of the carbon tax in April.
On the month CPI increased by 0.1% overall but fell by 0.1% ex food and energy before seasonal adjustment. Seasonally adjusted the rise was 0.4% overall and 0.2% ex food and energy. The latter follows two straight gains of 0.1% suggesting the strength of the data should not cause major concern at the BoC, even if it is not weak enough to call for a further easing near term.
The yr/yr ex food and energy rate was stable at 2.4% but is not one of the BoC’s core rates. The seasonally adjusted monthly detail shows a 0.6% decline in clothing and a weak 0.1% increase in shelter, but some signs of strength elsewhere. A 0.9% rise in transportation was led by gasoline while food was up by 0.5%. Recreation, education and reading also saw a firm month with a rise of 0.6%.
