• The BoC’s preferred core inflation gauges, such as trimmed mean and weighted median CPI, surged in May, indicating a reacceleration of underlying inflationary pressures.
• Core services inflation, including shelter costs, remains very high. Shelter inflation is broadening, with rents continuing to soar and other drivers of shelter costs entering a new phase.
• Categories that previously contributed to disinflation, such as travel tours, accommodation prices, and food prices, reversed higher, suggesting that earlier disinflation may have been temporary.
• The BoC’s decision to cut rates seen as a policy error because it violated forward guidance and reacted prematurely to only four months of soft core inflation after a prolonged period of missing inflation targets.