Canadian consumer price inflation data for the month of January is set to release tomorrow. According to a TD Economics research report, the headline inflation is likely to have accelerated to 2.4 percent year-on-year. On a sequential basis, the headline inflation is likely to have risen 0.3 percent.
Energy prices are expected to have contributed mainly to the month and year-on-year prints, with the latter helped by base-effects from a collapse in energy prices through the fourth quarter of 2018. This will translate into a 11 percent year-on-year rise for gasoline, suggesting a 0.1 percentage point rise in the year-ago contribution from energy, while the introduction of carbon taxes for Alberta will give a tailwind to prices in January.
Food is expected to have given another source of strength on higher agricultural prices along with higher shelter prices after a recovery in new home prices.
“Elsewhere, we anticipate a partial unwind of December’s surge in airfares to weigh on the headline print; last January saw nearly a full unwind of the prior month’s 21% m/m surge, although ongoing capacity issues linked to the 737 Max may limit any relief to Canadian travelers. In contrast to the headline print, we look for further softening in core inflation measures led by CPI-trim and CPI-median”, added TD Economics.
