CPI is due today at 8:30 am ET
Canadian inflation data could be boosted by a surprise jump in airfares, according to Capital Economics.
From Capital Economics:
"Although gasoline prices fell further in December, a surge in airfare inflation probably caused a surprise rise in headline inflation. In November, a drop in energy inflation from +7.9% to -1.3% pulled headline inflation down from 2.4% to 1.7%. Timelier data suggest that further falls in gasoline prices subtracted 0.2%-points from inflation in December. However, there's a good chance that inflation actually increased. Earlier this year, Stats Can changed the way that it tracks airfares in order to better capture seasonality. Due to increased seasonality in the index this year than last year, the reported rate of airfare inflation has surged during the peak travel months. The experience from the summer suggests that the monthly rise in December may be six times larger than we saw last year. (See Chart.) Although airfares are only a small part of the consumer price basket, if we're right that airfare inflation will surge from 9% to 22%, then headline inflation is likely to rise by 0.1%-points, to 1.8%. Experience from the summer also suggests that the artificial rise in airfares will temporarily push up at least some of the Bank's measures of core inflation. Due to methodological differences, we expect CPI common to remain unchanged at 1.9%, while the other two measures rise by 0.1%-point to 2.0%."
