Canada's CPI and retail sales expected to print above consensus

Canada's CPI and retail sales is expected to print above consensus tonight. For the former, upward seasonal pressures on core prices prevalent in recent months are not expected to persist in April, limiting the monthly rise in core CPI to a modest 0.1% (cons: 0.0%). 

Outside the core basket, while gasoline prices managed a mild advance in the month, this influence is likely to be offset by announced cuts to regulated natural gas prices, leaving headline CPI with an equally mild 0.1% monthly advance (cons: 0.1%). 

These month-over-month shifts are expected to push annual headline inflation down 0.3pp to 0.9%, while core inflation on a year-ago basis should edge only 0.1pp lower to 2.3%. For retail sales, following a substantial 1.7% increase in February, nominal retail sales are projected to rise by 0.6% in March (cons: 0.3%). 

Autos are expected to be a small offset on an otherwise robust advance in the core components (i.e., excluding autos and gasoline), suggesting that the ex autos sales measure can register a firmer 0.8% outturn in the month (cons: 0.4%). 

On a volumes basis, retail sales are expected to post a more moderate 0.4% gain. While such an outcome would leave real retail sales down an annualized 0.7% in Q1, it should, nevertheless, allow for household consumption to add 0.8pp to GDP in that quarter