- Prior month 1.7%
- CPI m/m -0.1% vs +0.1% expected (prior +0.3%)
Core measures
- CPI Bank of Canada core y/y 2.6% vs 2.7% expected (prior was 2.6%)
- CPI Bank of Canada core m/m 0.0% vs +0.1% prior
- Core CPI m/m SA +0.2% vs 0.1% prior (revised to 0.2%)
- Trim 3.0% versus 3.0% expected (prior was 3.0%)
- Median 3.1% versus 3.1% expected (prior was 3.1%)
- Common 2.5% versus 2.6% prior
This is a tad soft and that should clear up any doubts about the Bank of Canada cutting rates tomorrow. The bigger question is what they do beyond that, as only 25 bps more of cutting is priced in over the following several months. Gasoline prices down 12.7% y/y is a big drag on inflation at the moment. Ex-gasoline, prices rose 2.4% which is still not far off what the BOC would like but it could give them some angst. From where I stand they should be cutting in-step with the FOMC from here as the Canadian housing market is struggling and job losses are mounting.
For Canada specifically, CPI has been benefiting from two years of a cell-phone price war but that looks to have finally ended as prices were up 1.5% m/m in August as back-to-school discounting ebbed.
An increasing factor dragging down prices is travel as Canadians boycott the US. Prices for travel tours fell 9.3% in August and prices for air transport fell 7.6%.
This article was written by Adam Button at investinglive.com.