HomeContributorsFundamental AnalysisCanada: Consumer Prices Up 2.5% in June, Core Measures Average 2%

Canada: Consumer Prices Up 2.5% in June, Core Measures Average 2%

Consumer prices were up 2.5% year-on-year in Canada in June, up from 2.2% in May and above the consensus forecast for 2.3%. Adjusted for seasonal patterns, prices rose 0.1% month-on-month.

Several items saw price growth accelerate year-on-year, led by energy prices at 12.4% (from 11.6%). The only category to see inflation slow was household operations, which fell 0.1% (y/y) from +0.3% in May.

The Bank of Canada’s core measures edged up. CPI-trim and CPI-median both rose to 2.0% (from 1.9% previously), while CPI-common was unchanged at 1.9%.

Key Implications

Following a soft report last month, inflation regained its stride in June. Price growth is right on target, with evidence of firming in several categories. Energy prices will remain volatile, and lower prices for telephone services are still weighing on inflation. Looking through that, inflation is consistent with a healthy economy operating close to full potential.

Downside risks to trade remain at the fore, but the economic data are increasingly making the case for further Bank of Canada rate hikes. With a positive retail sales report, and the upside surprise on inflation, the odds of one more hike this year have risen.

TD Bank Financial Group
TD Bank Financial Grouphttp://www.td.com/economics/
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.

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