Canada CPI Jan 2023
Canada CPI Jan 2023
  • Prior was 6.3%
  • CPI m/m +0.5% vs +0.7% expected
  • Prior m/m reading was -0.6%
  • Gasoline prices 2.9% vs +3.0% y/y in prior
  • Gasoline prices +4.7% m/m vs -13.1% prior
  • Food 10.4% vs +11.0% y/y prior (prior revised to +10.1%)
  • Mortgage interest costs 21.2% vs +18.0% prior

Core measures:

  • BOC core y/y 5.2% vs 5.5% expected (5.5% prior)
  • BOC core m/m +0.1% vs +0.2% expected (-0.3% prior)
  • Median 5.0% vs 5.0% prior
  • Trim 5.1% vs 5.3% prior
  • Common 6.6% vs 6.6% expected

The rates market was pricing in a 25% chance of a Bank of Canada hike on March 8, just six week after the BOC said it was heading to the sidelines. That will dwindle after this report and Tiff Macklem can breathe a big sigh of relief.

USD/CAD rose to 1.3480 from 1.3455 on the report. That move isn't larger because the dynamics in Canada don't bode well for rate hikes. If the BOC is forced to hike to 5% or above then it would certainly lead to another leg down in the Canadian housing market and that's when the pain would really start to bite.

Also notable is that there were benchmark revisions to CPI-median and CPI-trim in today's report, though it doesn't look like it had any significant effect.