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Inflation Declines in Canada, But the CAD Keps Climbing
Inflation turned negative during March and April in Canada declining by 1.3% in total. But, it started reversing higher in May, increasing by 0.3% as the country reopened and increased further in June by 0.8%. But, CPI (consumer price index) was expected to cool off to 0.4% in July, although today’s report was much weaker than expectations. Monthly CPI fell to 0.0%, while YoY CPI cooled off to just 0.1%. Have a look for yourselves:
Canada July Consumer Price Index Report
- July CPI YoY +0.1% vs +0.6% expected
- June CPI YoY was +0.7%
- July CPI MoM 0.0% vs +0.4% expected
- June PCI MoM reading +0.8%
Core measures:
- Median CPI YoY +1.9% vs +2.0% expected (1.9% prior)
- Common CPI YoY +1.3% vs +1.6% expected (prior 1.5%)
- Trimmed mean CPI YoY +1.7% vs +1.8% expected (prior 1.8%)
Separately, Canadian wholesale trade sales rose 18.5% MoM in June compared to 10.5% expected and +5.7% prior. The rise in the Canadian dollar was one of the factors that helped to keep prices low. The big drags continue to be in the travel sector where flights were down 8.6% YoY and accommodation -27.0%. The Canadian dollar was slightly softer on the low inflation numbers, but has boiunced back, as USD/CAD keeps declining. I don’t think they make the BOC any more likely to add stimulus but that’s the message from markets.
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