Canadian inflation data for the month of September is set to release tomorrow. According to a TD Economics research report, the headline consumer price inflation is likely to have eased 0.3 percent sequentially. On a year-on-year basis, the CPI index is expected to have accelerated to 2 percent year-on-year from August’s 1.9 percent.
The year-on-year improvement is likely to have been driven by base effects after last September saw a sharp fall in airfares that negatively contributed 0.3 percentage point from the index and contributed to a 0.4 percent fall on the month.
In that regard, 2019 is evolving in a similar fashion; airfares have risen by a cumulative 17 percent since July, and seasonal factors tend to be most punitive in September, with prices dropping in 9 of the last 10 years. The continued grounding of Boeing aircraft should restrict the move.
“Looking beyond airfares, gasoline and prices will also exert a headwind to the monthly print owing to further weakness in the price at the pump and agricultural goods. This should translate into a more modest decline in the ex. food & energy index while the Bank’s preferred measures should hold at 2.0 percent on average, reflecting muted base-effects for CPI trim and median”, added TD Economics.
