Analysts at TD Securities note that the Canadian CPI edged lower by 0.2% m/m (-0.22% unrounded) which pulled inflation to 2.0% y/y from 2.4% in May (market: -0.3% m/m, 2.0% y/y).
“As expected, gasoline was the main driver with the price at the pump falling by 8% m/m, which shaved 0.25pp from the headline print. Gasoline prices are also exerting a significant drag on a year-ago basis, which left the ex-energy measure sitting at 2.6% y/y, slightly below the 10-year high observed in May.”
“The Bank of Canada’s preferred core inflation measures slipped to 2.03% on average from 2.10% in May, reflecting a 0.2pp deceleration in the trimmed mean measure from 2.3% to 2.1% y/y. However, this was partially offset by upward revisions to the weighted-median while CPI-common was unchanged at 1.8% y/y.”
“Headline inflation returning to the midpoint of the Bank of Canada’s target range should come as a mild comfort to policymakers as they remain on the sidelines awaiting clarity on the global outlook, and the 2.1% y/y reading for Q2 is in line with revised projections from the July MPR.”