Canada: CPI likely to firm to 2.2% in May - TDS

According to analysts at TD Securities, Canada’s CPI is projected to firm to 2.2% y/y in May, with prices up 0.2% on the month.

Key Quotes

“Energy will make a muted contribution after a stabilization in gasoline prices, which are coming off consecutive 10% m/m gains, leaving core goods and services to drive the headline print. Elsewhere, a rebound in rental prices following their first pullback in several decades should make a positive contribution to shelter cost inflation.”

“Core inflation should hold at 1.9% on average although we should see some divergence across the individual measures. CPI-trim is poised to push above 2.0% y/y due to base-effects but we do not expect this to be replicated across CPI-median or CPI-common, with downside risks to the latter on the heels of two consecutive quarters of <0.5% GDP growth.”