Canada: Inflation remains very heated, expected much lower after mid-2023 – CIBC
16.11.2022, 16:37

Canada: Inflation remains very heated, expected much lower after mid-2023 – CIBC

Data released on Wednesday showed the Consumer Prince Index (CPI) in Canada rose 0.7% in October, in line with expectations while the Core rate increased by 0.4% below the 0.7% of market consensus. Analysts at CIBC expected inflation to continue moving lower. They look for the Bank of Canada to raise rates by 50 basis points at the next meeting.

Key Quotes: 

“Inflation remains very heated, with the CPI holding to a 6.9% 12-month pace, and prices up another 0.7% in October (or 0.6% seasonally adjusted).”

“Today's data were in line with consensus, and although the headline CPI was a few ticks lower than we expected, prices excluding food/energy were only one tick softer than we had built into our projection. We still expect much lower inflation by the latter half of 2023, but today's data were generally a reminder that we need to first see downward pressure from on demand from softer job and income gains to make that happen.”

“We look for the Bank of Canada to add another half point to overnight rates in December, and they will have to rely on indicators of slowing growth, rather than immediate progress on inflation, to justify a pause in Q1.”

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