Canadian Inflation on Ice

Wrapping up some fairly important Canadian data this week, CPI numbers were released earlier this morning and showed that inflationary pressures are easing somewhat, continuing to stay of the south side of the Bank of Canada's target. On the heels of yesterday's dreadful Retail Sales print, expectations were for Core CPI to ease to 1.9% on y/o/y basis, and the monthly figure to increase 0.2% from the April reading. The headline figure was forecast to move materially lower on an annualized basis, something the Bank of Canada hinted at in their rate statement at the beginning of June. Missing median economist expectations on both the core and headline figures, the y/o/y reading came in at 1.8% and 1.2% respectively, confirming that the BoC's hawkish view on interest rates will not be influenced by runaway price levels at this point in time. The 0.8% decrease in the headline figure for the 12 months to May was mostly attributable to declines in gasoline prices, along with falling price gains in the purchase of passenger vehicles. The Loonie weakened marginally after the release of the inflation numbers, but started to claw back some of those losses as North American equity futures and WTI increased ahead of the opening bell.