CPI data for January is due at 1330GMT

A couple of bank previews follow.

RBC:

  • We project just a 0.1% monthly advance in headline CPI in January, with the YoY rate falling 0.6pp to 1.4%. A further deterioration in gas prices (from -8% to -14% y/y) and a partial reversal of December's 21.7% m/m airfares increase are behind the latter, though food prices should also edge down from 2.9% y/y. In addition to the volatile airfares component, uncertainty will be higher than usual due to a new methodology for household rent (~6% of the basket) and updated CPI basket weights.
  • The BoC's three core measures averaged 1.87% in December and have been around 2% since February 2018. Trend-like increases a year ago in CPI-median and CPI-trim give no bias on direction for January, though they could- temporarily-edge lower in the rest of Q1

CIBC:

  • Inflation was stronger than expected in December, but that was largely due to a methodological change in the way airline fares are calculated. The effect from that change should, however, reverse in the upcoming report, adding to the depressing impacts of lower gasoline prices during the month.
  • Look for the CPI index to have stood still in NSA terms in January, and for headline inflation to dip all the way down to 1.3%.
  • The Bank of Canada's core common component indicator of underlying price pressures should also decelerate a tick to 1.8%, within striking distance of the 2% target, but that's not really saying much. The average of the BoC's core measures hasn't reached 2% in any quarter since the recession.