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Modest Uptick In Monthly Core Inflation Goes Against Latest Downtrend

CANADA
  • The monthly run rates support the takeaway of a report that isn’t wildly stronger than expected but does question the pace of prior moderation.
  • Simple core of headline excl food & energy increased to 0.35% M/M from an upward revised 0.28% (initially 0.21%), which meant that instead of hovering ~3.5% annualised, the 3-month run rate now sits at 4.2%.
  • The Bank’s policy statement on Dec 7 noted “Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum.” This likely still holds but perhaps with added emphasis on may.
  • The Q4 inflation expectations surveys hit Jan 16 before Dec CPI on Jan 17 ahead of the BoC on Jan 25.

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