Canada: CPI and retail sales in focus today - TDS

Analysts at TDS suggest that the week will end on an eventful note with the dual release of June CPI and May retail sales from Canada which will be the key economic releases for today’s session.

Key Quotes

“Even though TD and the wider market expect headline inflation to slip further in June, we think retail sales may be more important to the near-term policy outlook after the Bank of Canada's acknowledgement of temporary disinflationary factors. TD expects total retail sales to rise by 0.3% m/m in May, in line with the market consensus, while weaker consumer prices should allow volumes to exceed the nominal print. We expect ex-auto sales to post a 0.1% m/m decline (market: unchanged) as a combination of weaker gasoline prices and a slowdown in the housing market constrain core spending.”

“On CPI, we look for headline inflation to decelerate to 1.1% on a year-ago basis, in line with market estimates, reflecting unchanged prices on the month (market: -0.1% m/m). Energy prices will provide a sizeable drag but should be offset by some recovery in food prices and rising shelter prices. Core inflation measures should show some stabilization but we cannot rule out another move lower.”