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Canadian Inflation Jumps to 3.1% On Higher Energy Costs
Wednesday July 23, 01:16 PM
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Inflation in Canada rose to 3.1% in June from 2.2% the month prior, on rising energy costs. The prices accelerated faster than the 2.9% economists had expected and rose above the BoC’s target band of 1-3% for the first time since September, 2005. Governor Mark Carney said last week that he expects inflation to continue to rise above 4% which would be double the central bank’s estimates at the beginning of the year. Looking at the breakdown we see that energy costs rose 4.4% with food costs gaining 1%. Indeed, the core reading stripping out the volatile components actually remained unchanged at 1.5% below expectations of an increase to 1.6%. The MPC traditionally looks to the core reading when determining policy decisions, but with the rapid rise of headline inflation has force the committee to refocus on it. Nevertheless, the slowdown in retail sales to 0.4% and the 5,000 jobs lost in June may keep the MPC on hold for the remainder of the year. – John Rivera, Currency Analyst
Source:John Rivera, Currency Analyst strategist@dailyfx.com
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