- Prior was 6.9%
- CPI m/m -0.6% vs -0.5% expected
- Prior m/m reading was +0.1%
- Gasoline prices +3.0% vs +13.7% y/y in prior
- Gasoline prices -13.1% m/m vs -3.6% prior
- Food +11.0% vs +11.4% y/y prior
- Mortgage interest costs +18.0% vs +14.5% prior
Core measures:
- BOC core y/y 5.4% vs 5.8% prior
- BOC core m/m +0.3% vs +0.0% prior
- Median 5.0% vs 5.0% prior
- Trim 5.3% vs 5.3% prior
- Common 6.6% vs 6.8% expected
The market was pricing a 71% chance of a 25 bps hike from the BOC this month ahead of the report with the remainder betting on no change in rates. Initially that's little changed but this combined with the weak BOC business outlook survey yesterday should ensure that the central bank is either done already or is one-and-done.
The Canadian dollar is slightly stronger after the data but I think that's more about a very weak Empire survey and a delayed reaction to better oil and gas prices.
CIBC notes that the largest contributor to Canadian inflation is now mortgage interest costs.
"Ex-food, energy and mortgage costs, seasonally adjusted inflation rose approx 0.2% m/m in December, with a 3-month annualized rate of about 2.5%. That pace is much closer to target." They still think the BOC will hike 25 bps next week.
CAD
