An earlier post with a Canadian February retail sales and March CPI what to expect is here

  • CAD traders - inflation and retail sales data due today - preview

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CPI previews;

BMO:

  • Consumer prices likely rose another 0.4% in March, which would mark a third consecutive sizeable increase. Unlike in February, energy prices were mostly higher in the month, with gasoline climbing about 3%, which will contribute to the anticipated solid headline. Clothing and recreation are the other sectors that look to see chunky increases, while a drop in new home prices will restrain the shelter component. Seasonality is solid for March, so adjusted prices will be up a milder 0.2%. Our call will push annual inflation up two ticks to 2.4% y/y, a six-year high.
  • The Bank of Canada's core CPI measures have all trended higher in recent months, averaging 2% for the first time since mid-2016. There's upside risk for the trim and median measures (about a tick) as both saw very modest gains a year ago, which would push the average above 2% for the first time since 2012. While this report is out after the April 18 BoC meeting, it could make things a bit more interesting for the next confab in May.

CIBC:

  • On the back of higher oil prices, Canadian inflation is set to reach its fastest pace in more than six years.
  • Even the Bank of Canada's core common component measure will indicate that consumer prices are now tracking slightly above the midpoint of the central bank's 1-3% target.
  • But don't expect that to materially alter the pace of rate hikes in Canada. Policymakers are contending with uncertainties that have the potential to open up slack in the economy, leaving reason to err on the side of caution. Furthermore, at least part of the recent rise in apparent inflationary pressures has been due to Ontario's minimum wage hike, something the Bank of Canada will likely view as less indicative of an economy that is overheating.
  • Headline inflation looks set to average roughly 2½% over the remainder of 2018, but the pace of interest rate hikes isn't likely to see a commensurate acceleration based on that alone.
  • The outlook for monetary policy will be highly contingent on incoming growth numbers, which have looked somewhat sluggish of late, and the evolution of trade negotiations with the US.

Retail sales:

BMO:

  • Retail sales are expected to rise 0.5% in February, building on January's rebound from December's steep drop. Auto sales likely rose modestly in the month, providing support to the headline. Gasoline prices were slightly lower in the month on a seasonally-adjusted basis, so that will weigh on overall sales.
  • We look for sales ex. autos to climb 0.4%, while sales ex. autos & gas are expected to gain about 0.5%. The latter could be dragged down a bit by electronics which remain at an elevated level after some wild spikes (up and down) in recent months. And, the sharp pullback in housing activity to start 2018 could dampen activity in related sectors.
  • Lastly, goods prices were slightly higher in the month, suggesting volumes will see a decent gain, building on January's small increase.

CIBC:

  • Retail sales were by no means booming to open the year, but they were one of the few sectors in the economy to actually make progress. Early indications are that gains were even more meagre in February. Data already in hand lead us to believe that auto sales will weigh on total spending for the second month in a row, while gasoline prices don't suggest filling stations will move the needle either way.
  • As a result, our forecast for a modest 0.1% increase in retail sales is contingent on the ex-auto and gas figures growing at a trend-like pace. A weak reading on retail sales would mean the sector won't be a major driver of an overall economic rebound in February.