Canada Slowly Emerging From Core Inflation Softness

Canadian April CPI undershot expectations at 2.8% y/y, though core measures are slowly rising from previous lows. The headline weakness was driven by a questionable drop in travel service prices that offset accelerating core goods inflation.

Key Takeaways

• 1.Total Canadian CPI significantly undershot expectations in April, coming in at 0.35% m/m compared to the Scotiabank estimate of 1.0%.
• 2.Core goods inflation is accelerating while services inflation has dropped, largely due to a suspect 69% annualized drop in travel tour prices.
• 3.Despite the soft headline number, Bank of Canada's preferred core measures (trimmed mean and weighted median) have exited their recent lowest levels.

Table of Contents

• Contributors
• Canada is Slowly Emerging from Core Inflation Softness
• What drove services inflation to be so weak as an offset that trashed my call?
• CA INFLATION COMPONENT BREAKDOWN

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