Inflation data due at 1230GMt, along with retail sales for January
CIBC:
- Headline inflation likely popped its head back above the Bank of Canada's 2% target, but don't expect that to move the needle on the monetary policy outlook.
- The less volatile core common component measure of inflation should remain at 1.8%, suggesting that price pressures remain well contained.
- The monthly change in prices will register an unadjusted 0.6% advance, but that's mostly due to seasonal factors, leaving the SA reading showing a more modest gain of 0.1%. Even with a trend-like increase in the ex-food and energy index of 0.2%SA, the month-over-month change will be dragged lower by a decline in energy prices and a soft food reading after adjusting for seasonality factors.
- Despite exceeding 2% in February, headline inflation won't meaningfully accelerate until later in the year, giving Governor Poloz plenty of time to remain patient on rate hikes in the face of other headwinds.
RBC:
- We expect headline CPI to rise 0.4% m/m in February, largely reflecting seasonal price increases (clothing, travel services) in the month. Gasoline prices were roughly flat MoM, but an easier year-ago comparable for the category should see the headline YoY rate rise back to 1.9% after it dipped down to 1.7% in January.
- The average of the BoC's three measures continued its steady rise since the middle of 2017, hitting 1.83% in January with improved breadth (each at 1.8% or 1.9%). What look like relatively easy year ago comparables for CPI-Median and CPI-Trim should see the average rise once again, with the possibility of one of them hitting 2.0% or higher for the first time since late 2016.
