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The BMO Capital Markets analysts are out with their afterthoughts on the surprise jump in the Canadian inflation, highlighting the unexpected change.

Key Quotes:

“After being stable and mild — bizarrely mild — for years, the rent component of the Canadian CPI is suddenly blasting higher. A change in StatsCan’s methodology (i.e., moving somewhat closer to reality) has led to a sudden acceleration. After averaging just 1.2% annualized gains over the past 15 years, rents have jumped 2.7% y/y.

That’s the biggest rise in this component since 1992, and we’re likely headed much higher, since the six-month trend is 4%.”