- Prior month 4.0%
- CPI MoM -0.1% versus 0.1% expected
- Prior MoM 0.4%
Core measures:
- BOC core YoY 2.8% versus 3.3% last month
- BOC core MoM -0.1% versus 0.1% last month
- CPI median 3.8% versus 4.1% last month
- CPI trim 3.7% versus 3.9% last month
- CPI common 4.4% versus 4.8% last month
The year-over-year deceleration was broad-based, Statistics Canada said, stemming from lower prices for some travel-related services, durable goods and groceries. The improvements come despite a 7.5% y/y rise in gasoline prices and +0.8% m/m. That rise has unwound in October so there’s some good news in the pipeline.
Groceries remain a problem point with prices up 5.8% y/y but that has decelerated from +6.9% y/y as base year effects lower meat and dairy inflation.
A big y/y decline was in airfares, which fell 21.1% in September as flight capacities has improved.
USD/CAD jumped on this report, in part because it’s a dovish reading that should lead the BOC to cool its recent hawkish rhetoric at next week’s meeting. The pair rose about 50 pips on the headline. The other side of the jump is because the US reported a very strong retail sales report, leading to broad USD strength.
Pricing for a hike next week is down to 22% and the March meeting now prices in 18 bps of hikes from 24 bps last week.