Canada April consumer price index data:
- Prior was +0.9% y/y
- Ex-energy +1.6% y/y
- CPI vs -0.7% vs -0.6% m/m expected
- Prior CPI +0.7% m/m
- Gasoline prices -39.3% y/y, largest decline on record
Core measures (y/y):
- Median +2.0% vs +1.9% exp
- Common +1.6% vs +1.7% exp
- Trim +1.8% vs +1.8% exp
This is Canada's first dip into annual deflation since 2009 but the rebound in energy prices in May might reverse that in next month's report. We're not really going to get a sense of the price of anything for a few more months until the economy re-opens and we find out what kind of new normal we're living in.
Some things in this report already point to broader falling prices with clothing and footwear down 4.1% y/y but it's tough to say if that's simply due to inventory clearouts and extremely slow sales rather than something more structural. Statistics Canada said this:
" In-person shopping for non-essential goods was suspended in many provinces throughout April, leaving clothing retailers with higher inventories since most clothing is typically purchased in-store. As a result, many retailers applied large discounts to online prices to avoid having leftover seasonal stock."
Another issue is the changing real weight of components. Things like clothing, airline flights, restaurant meals and hotel lodging add up to a significant weight in the CPI but no one was doing any of those things in April. Instead, they were buying groceries and food prices rose 3.4% y/y. Even within that, prices for essentials like rice (+9.2% y/y), eggs +8.8% and beef +8.5% show the hit to pocketbooks was likely larger.
