Canadian inflation data for July is due on 21 August 2019
- At 1230GMT
A couple of previews via Canadian bank analysts.
Scotia
A sharp drop in inflation for the month of July is likely … Headline CPI is likely to decelerate by a half percentage point to 1.5% y/y.
- A shift in year-ago base effects combined with little by way of typical seasonal influences and a small rise in gasoline prices are expected to push overall seasonally unadjusted prices up by just 0.1% m/m.
- The bigger issue may be what happens to 'core' inflation, measured as the average of the BoC's three central tendency measures. It has been floating around the 2% target mid-point of the 1-3% policy range
TD:
- headline CPI forecast to decelerate to 1.7% y/y from 2.0% in June
- a 0.2% m/m increase is overwhelmed by base-effects after last July saw the largest seasonally adjusted increase in ex-food & energy prices since 2008
- Our forecast includes a 0.1% increase in the ex. food & energy basket which would see this measure of core inflation edge lower to 1.9% y/y from 2.4% in June
- We also look for further deceleration in the Bank of Canada's preferred core measures, with CPI-trim and CPI-median projected to edge lower by 0.1pp to 2.0% and 2.1%, respectively, while CPI-common should hold at 1.8% y/y. However, this would leave the average of the three unchanged at 2.0% y/y after rounding
- risks ... are asymmetric however: an upside surprise will not change the narrative around the global slowdown (and markets haven't priced in much for the September BoC date), but a disappointing print could cause markets to pull rate cut expectations forward
Bolding above is mine.
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The next BoC monetary policy decision is due on September 4.
