Notes From the Desk – CAD May CPI – A Thorn in the Side
Canadian May CPI was well above expectations, halting the trend of falling prices.
By the numbers:
- YoY headline CPI – 2.9% (2.6% expected)
- YoY CPI Median – 2.8% (2.6% expected)
- YoY CPI Trim – 2.9% (2.8% expected)
Food, travel tours, hotel prices, and rent were the most significant contributors to the increase. On a positive note, mortgage interest costs continued to moderate.
The implications:
The Bank of Canada will not be happy with today’s data, which suggests that further progress on reaching 2% in inflation might be uneven.
Yields are 7-9 bps higher as traders lower the odds of a July cut to around 40%.
