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CIBC Offer Consensus View For June CPI But See It Rising Back To 3.5% Y/Y By The Fall

CANADA
  • CIBC offer a good take at the consensus call for tomorrow's Canadian CPI report for June, seeing headline likely decelerating further to 3.0% Y/Y (cons 3.0%), although that may be the low water mark for a few months as, mainly gasoline, base effects become less favourable.
  • Core (ex food/energy) price pressures have eased, but are not yet back to levels consistent with a 2% inflation target. That’s based off a 0.3% M/M seasonally adjusted gain for a tick higher from May although includes the steep climb in mortgage interest costs tied to BoC rate hikes.
  • However, food prices remain the primary source of inflationary pressure now, with less sign of deceleration than witnessed recently in the US.
  • Headline inflation will likely tick back up again to around 3.5% Y/Y by the fall, as the base effects from gasoline prices become less favourable. However, we see signs that core inflation is easing a little quicker than the BoC currently acknowledges, and as a result we see inflation easing back to the 2% target by 2H24 (three quarters earlier than the Bank’s most recent projection).
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