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Canada Aug CPI Back To BOC Target +2% YOY, Slowest Since Feb 2021

CANADA DATA
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  • Canada August CPI eases back to BOC's target at +2% YOY, slowest since February 2021. That is below the +2.1% forecast. Month-on-month -0.2%, better than +0.0% expected. 
  • BOC preferred core measures remained at slowest pace since April 2021, median +2.3% and trim +2.4%.
  • Headline deceleration was due in part to lower prices for gasoline, due to a combination of lower prices and a base-year effect. Excluding gasoline, the CPI rose 2.2% in August, down from 2.5% in July.
  • The increase in CPI was led by mortgage interest cost and rent, which slowed down but remained elevated. Mortgage interest costs rose at a slower pace for the 12th straight month, up 19%.   
  • Clothing and footwear prices dropped MOM in August for the first time since 1971, -0.6% MOM, the month associated with back-to-school shopping. 
  • BOC has said that more interest rate cuts could be justified if inflation continues to ease. At least a 25 bps cut is expected in the next BOC rate decision on October 23.  
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  • Canada August CPI eases back to BOC's target at +2% YOY, slowest since February 2021. That is below the +2.1% forecast. Month-on-month -0.2%, better than +0.0% expected. 
  • BOC preferred core measures remained at slowest pace since April 2021, median +2.3% and trim +2.4%.
  • Headline deceleration was due in part to lower prices for gasoline, due to a combination of lower prices and a base-year effect. Excluding gasoline, the CPI rose 2.2% in August, down from 2.5% in July.
  • The increase in CPI was led by mortgage interest cost and rent, which slowed down but remained elevated. Mortgage interest costs rose at a slower pace for the 12th straight month, up 19%.   
  • Clothing and footwear prices dropped MOM in August for the first time since 1971, -0.6% MOM, the month associated with back-to-school shopping. 
  • BOC has said that more interest rate cuts could be justified if inflation continues to ease. At least a 25 bps cut is expected in the next BOC rate decision on October 23.