Canada: CPI and Retail Sales Preview from major banks


Today, we have an all-important release of Canada’s October CPI and September retail sales data and as we get close to the decision timings, here are the expectations as forecasted by the economists and researchers of major banks from the Canadian data dump.

Most of the researchers and economists expect an unchanged print in September for the Canadian retail sales, while they expect CPI to post a reading in between 2.0% to 2.4% range for October.


“CPI: We look for consumer prices to decline by 0.1% in October. Typically, prices are unchanged on a m-o-m basis. However, we expect a decline in gasoline prices to tip the balance toward a small drop in prices overall, and more than offset another anticipated increase in mortgage interest costs. Since November 2017, mortgage interest costs have increased by an average 0.6% per month, boosting the year-on-year rate of increase from 0.6% to the current 6.4%. With the small drop in total CPI in the month, we expect the annual rate of increase of consumer prices to fall to 2.0% from the prior 2.2%.”

“Retail sales: We look for retail sales to be unchanged in September, but sales excluding autos to rise by 0.1%. We expect auto sales to decline by 0.4% in the month. This drop would follow the first increase in auto sales in the three months in August. Given that consumer goods prices were little changed in the month, we also expect the change in retail prices to be small. Hence, the changes in retail sales in the month will largely be in real terms.”


“CPI: Analysts at TD Securities expect Canadian CPI to inch higher to 2.4% in October on y/y tailwinds from energy and food prices.”

“Airfares have fully unwound their previous jump and therefore pose less risk to the figure this month, though the methodology changes still make the figure uncertain.”

“Most of the attention will be on the core measures this month, as the report marks the last inflation print ahead of the December BoC meeting.”

“Average BoC core ticked back to 2.0% and there is risk for a rebound back to 2.1%, raising odds of multiple rate hikes in the next three meetings. However, headline inflation is still the Bank’s main target, and the latest oil rout leaves inflation tracking below the BoC’s projections at 2.0% in Q4 vs 2.3%.”

“Retail Sales: Analysts at TD Securities are looking for an unchanged print in September for the Canadian retail sales as a pullback in motor vehicle sales offsets a modest increase in the core.”

“Motor vehicles are poised for their third decline in the last four months as consumers grapple with higher debt costs and prioritize spending elsewhere. However, we expect ex-auto sales to rebound by 0.3% m/m on a recovery in import activity as well as strong employment data.”

“Electronics should benefit from the release of new iPhone models mid-month although lower prices at the pump will weigh on gasoline station sales.”

“Real retail sales should come in at or slightly above the nominal print owing to the latter which contributed to a modest decline in seasonally adjusted consumer prices for September. This would cap off a relatively disappointing quarter for retail activity in Canada, with sales up a muted 0.5% (annualized) for Q3 as a whole, consistent with a moderation in household consumption from Q2.”


“CPI: All three of the core measures retraced in September with headline CPI falling 0.4% MM (below consensus).

“While much of the softness in headline CPI was in transitory components, the pullback in the core inflation measures indicates that there are still few signs of building underlying inflationary pressures.”

“Although growth has been robust, due to softer wage growth, we eliminate the possibility of a December rate hike and expect 3 hikes in 2019 by the BoC.”


“CPI: James Knightley, Chief International Economist at ING, suggests that they don’t expect a surprise in inflation data of Canadian economy as of September, when inflation shocked the consensus by coming in at -0.4% month-on-month.”

“We’re looking for a 0.2% MoM rise, with energy prices the main contributor.”

“September’s inflation estimate was wrong partly because analysts misjudged the impact of oil prices.”

“October’s energy price story should be positive given this month took the brunt of the gasoline rally. This should keep the headline figure propped up above the Bank of Canada’s 2% inflation target; we forecast 2.3% YoY.”

“The outlook for November is clearly less inflationary, with the emerging decline in oil prices posing downside inflation risks in the near-term.”

“Average inflation in 2019 is forecast at 2.1%, down from 2.3% this year. The BoC will continue to hike as long as its key rational (core inflation) is around the 2% target, and we expect two hikes in 1Q19 and 3Q19. We’re not ruling out a third increase but this is subject to downside risks subsiding.”

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