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CIBC Expect CPI ex Food & Energy To Validate BoC's Hold

CANADA
  • CIBC see headline CPI having likely increased a non-seasonally adjusted 0.2% M/M in August after a jump in oil prices, boosting CPI to 3.8% Y/Y which is “magnified by a weak year-ago reading falling out of the calculation”.
  • “Higher gas prices will have left less money for spending elsewhere, and weaker demand could have prevailed in categories outside of food and energy, leaving 12-month ex. food and energy prices at 3.4%, and validating the BoC’s hold in September.”
  • CIBC see this potential for a further temporary acceleration in September but expect it to end the year lower, “as consumers will be spending more on mortgage payments and rent, denting demand for discretionary goods and services, and extending the deceleration in core prices.”

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