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Canadian CPI Actual -0.1%, Expected 0.2%, Previous 0.2%
Canadian Core CPI Actual 0.1%, Expected 0.1%, Previous 0.1%
Release Explanation: The CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore give an overall read of inflationary pressures. It is the most widely used Inflation indicator of central banks, institutions, and governments. It is used to calculate cost of living numbers for government programs. “Each regional central bank will have their own CPI target rate, and each will differ in line with the way they individually want to control the aspects of their own economies.” TheLFB-Forex.com Trade Desk said.
TheLFB-Forex.com Trade Desk Thoughts: The core rate of inflation rose again in April, coming in at 0.1%, as expected. The CPI number came in at -0.1%, declining for the first time in the last three months. In April from one year earlier, consumer prices rose 0.4%, while core prices gained 2.4%.
Food prices rose 7.1% during the 12-month period to April, slower than the 7.9% rise in March.
Shelter costs rose 0.2% during the 12-month period to April after increasing 2.1% in March. A sharp decline in natural gas prices mitigated growth in the shelter index in April. The 12-month change in the shelter price index has been slowing since July 2008. Transportation costs fell 8.0% in the wake of year-over-year declines in prices for both gasoline and passenger vehicles.
“The release shows that core prices are on an upward path in Canada, something that might prove dangerous on the medium to long term,” TheLFB-Forex.com Trade Team said. “The recent rate-cuts made by the Bank of Canada will only fuel more inflation in the coming months, something that may ultimately force the central bank to raise the interest rate. Except for the transportation index, every other category recorded gains from one year earlier,” they added.
Forex Technical Reaction: The cad declined 25 pips following the news release, re-testing the 1.1525 support area. The Cad traded side-ways during the overnight session, even though oil is holding above the $60 level.
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