MNI 5 THINGS:Canada Y/Y Inflation Seen Highest in 6 Years

--5 Things To Look For In Canada March Inflation Report

By Yali N'Diaye

     OTTAWA (MNI) - Statistics Canada will release the March Consumer Price

Index data on Friday morning. Ahead of the release, we highlight five themes for

particular attention:    

-- SIX-YEAR HIGH

     Analysts in a MNI survey expect March CPI to increase 0.5% on the month,

for a 12-month rate of 2.5%, which would be the highest since February 2012,

when it was 2.6%. This is the second consecutive month with the headline index

above the Bank of Canada's 2.0% target. It rose 2.2% in February

-- ENERGY, FOOD, CAD

     Energy is expected to boost CPI readings in March due to higher oil prices.

The depreciation of the Canadian dollar in February could also impact food

prices in March

--CORE STILL UP

     The Bank of Canada's preferred measures of underlying inflation have been

trending up, and analysts see reason for it to continue in March, as it

continues to reflect capacity absorption in the economy. The range of three

BOC's preferred measures of underlying inflation edged up to 1.9%-2.1% in

February from 1.8%-1.9% in January. CPI-common picked up to 1.9% from 1.8%, the

highest since February 2012. CPI-trim and CPI-median both rose 2.1%, their

highest rates since June 2016 and October 2016, respectively.

--INTERNET, MINIMUM WAGES

     March could see the impact of Internet price hikes by large telecom

companies, with Rogers having raised prices on March 12, after Telus ended its

bundle discount on January 21, which could add a boost to the year-over-year

household operations, furnishings and equipment component. Another factor to

watch is the minimum wage increase in Ontario since January, which could impact

restaurant prices year-over-year.

--NO PANIC MODE

     However, the BOC is unlikely to go into panic mode, as it indicated in its

policy statement Wednesday that it has already factored in a higher inflation

than was anticipated in January. "The transitory impact of higher gasoline

prices and recent minimum wage increases will likely cause inflation in 2018 to

be modestly higher than the Bank expected in its January Monetary Policy

Report," it said as it revised its 2018 inflation projection to 2.3% from 2.0%.

CPI is expected to come in at 2.1% in the first quarter and 2.3% in the second

quarter. Beyond 2018, it should return to the 2.0% target, which is why Friday's

headline number is unlikely to move the BOC's thing, should analysts' forecasts

materialize. 

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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