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Aug 16 - 09:55 AM

CAD: CPI: Headline Inflation Decelerated In July But BoC May Still On Track For 75bps Hike At Next Meeting - CIBC

By eFXdata  —  Aug 16 - 08:52 AM

CIBC Research discusses its reaction to today's Canada CPI inflation print for the month of July. 

"Canadian inflation takes its foot off the gas and starts its long descent. Headline CPI inflation decelerated to 7.6% year-over-year in July on a much smaller 0.1% month-over month increase, in line with consensus expectations. As expected, gasoline prices were the main driver of the slowdown as they fell 9.2% on the month. This was somewhat offset by a large increase in natural gas prices, which at 12.4% were the biggest contributor to the monthly increase. In what is bad news for consumers, food prices resumed their climb in July after taking a pause in June. CPI inflation excluding food and energy spelled further bad news with an increase of 0.5% on a seasonally adjusted basis. Prices for services impacted by the pandemic, such as hotels, air transportation and restaurants all increased," CIBC notes. 

"With the large revisions to CPI common in recent months muddying the message from the preferred core measures, the Bank of Canada is probably keeping a close eye on inflation ex food/energy these days. Today's acceleration in that category is therefore not good news for the Bank, which should still be on track for a 75bps increase in rates at its next meeting," CIBC adds.

CIBC Research/Market Commentary


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