Canadian Consumer Prices soared 3.0% YoY in July – well above 2.5% expectations – and the highest inflation rate since 2011.
Gasoline prices – up 0.8% in July and 25.4% from a year earlier – have also been a main contributor to the recent acceleration in prices. Excluding gasoline, inflation would be 2.2 percent in July.
As Bloomberg notes, the faster-than-expected gains will test Bank of Canada Governor Stephen Poloz’s resolve to raise interest rates gradually over the next year to avoid a disruption to the economy. Price gains have now reached the upper end of the central bank’s 1 percent to 3 percent inflation range.
And that has prompted an immediate reaction in the loonie – instant buying…
Finally, we note that there was little discernable effect of higher tariffs on consumer prices in July. Statistics Canada released a report on the estimated impacts of Canada’s tariffs on U.S. metal and consumer products and found there would only be a small overall increase — with no more than a decimal point increase to inflation over a limited period of time.
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