Canada May CPI ex gasoline
- Lowest reading since June 2021
- Prior was 4.4%
- CPI m/m +0.4% vs +0.5% expected
- Prior m/m reading was 0.7%
- Gasoline prices -18.3% vs -7.7% y/y in prior month
- Gasoline prices -0.8% m/m vs +6.3% prior month
- Ex gasoline +4.4% vs +4.9% prior
- Food +8.3% vs +9.1% y/y prior
- Mortgage interest costs 4.9% y/y vs 4.9% increase in April
- Goods inflation +2.1% y/y
- Services inflation +4.9%
Core measures:
- BOC core y/y 3.7% vs 3.9% expected (prior 4.1%)
- BOC core m/m +0.4% vs +0.5% prior
- Median 3.9% vs 4.2% prior
- Trim 3.8% vs 4.2% prior
- Common 5.2% vs 5.7% prior
This is the final CPI print ahead of the July 12 Bank of Canada rate decision. Ahead of the release, the market was placing a 65% probabilty on a 25 bps rate hike and that ticked to 62% afterwards. I maintain that the BOC is making a mistake in hiking further rather than simply letting high rates do their thing to a heavily-indebted Canadian consumer.
Excluding mortgage interest cost, CPI rose 2.5% in May which argues that the BOC itself is the main source of inflation for Canadians.
