- Prior month 2.6%
- CPI m/m +0.3% versus +0.6% expected. Prior month +1.1%
- Core CPI m/m +0.1% versus +0.7% last month
- Core CPI y/y +2.2% versus 2.7% last month
- CPI Median y/y 2.9% versus 3.0% estimate. Last month 2.9%
- CPI Trim 2.8% versus 3.0% expected Last month 2.9%
- CPI Common 2.3% versus 2.5% last month
- Full report
This is an important final data point ahead of Wednesday’s Bank of Canada rate decision. Ahead of the data, the market was pricing in a 60% chance of a hold and a 40% chance of a cut. That’s shifted to 50/50 and USD/CAD has quickly risen about 30 pips.
Macklem signalled that they were going to be more-patient in cutting rates but this data point gives them the greenlight to cut or signal that a cut will be coming in June.
The report highlights the end of the GST tax holiday on February 15 as something that moderated the drop in prices. Prices for travel-related items were a drag with air transport down 12% y/y and travel tours down 4.7%. Cell phone service prices also fell 8.8% y/y amid a price war from Canadian telcos.
Looking ahead, the Canadian carbon tax was removed on April 1 and that’s led to a sharp drop in gasoline prices that’s been compounded by the falling price of oil. That will show up in next month’s data.
This article was written by Adam Button at www.forexlive.com.