Canada: Annual CPI rises to 5.7% in February versus expected rise to 5.5%

• Headline Canadian inflation hit 5.7% YoY in February, above the 5.5% expected. 
• The loonie saw some momentary strength in wake of the latest hotter than expected inflation figures. 

Canadian inflation hit 5.7% YoY in February, according to Statistics Canada's latest headline Consumer Price Index (CPI) release on Wednesday. That was above the expected rise to 5.5% from 5.1% in January. The MoM increase in the headline CPI in February was 1.0%, a little above the 0.9% expected and above January's 0.9% reading. 

The Bank of Canada's Core Price Index rose at a YoY rate of 4.8% in February, above the 4.5% expected and last month's 4.3% reading. That was driven by a higher than expected 0.8% MoM price increase, in line with the pace of price gain seen in January. 

Median CPI rose to 3.5% YoY in February from 3.3% a month earlier, Trimmed CPI was up to 4.3% from 4.0% and Common CPI hit 2.6%, a tad above the 2.4% expected print and above January's 2.3% reading. That meant the average of the BoC measures came in at 3.46%, up from 3.2% in January. 

Market Reaction

The loonie saw some momentary strength in wake of the latest hotter than expected Canadian inflation figures, which may increase pressure on the BoC to tighten monetary policy at a quicker pace in the months/quarters ahead.