Canada: Downward pressure on prices – NBF

The Canadian headline inflation numbers in March were below consensus expectations on both a monthly and annual basis by Kyle Dahms from the National Bank of Canada.

Key quotes

“Canada’s consumer price index dropped 0.6% in March (not seasonally adjusted), bringing the year-on-year inflation rate down to 0.9%.”

“In seasonally adjusted terms, headline prices fell 0.9% as declines for transportation (-4.2%), recreation (-0.4%), clothing (-0.1%), alcohol/tobacco/cannabis (-0.1%) and shelter (-0.1%) more than offset increases in household operations (+0.2%) and food (+0.1%).”

“A depreciated currency (via higher imported inflation) and shuttering of certain supply chains could lead to higher prices although a wholesale drop in demand should offset the latter. There appears to be an overall downward pressure on prices due to the COVID-19 shock.”