Data this morning showed that Canada’s inflation rate in June decelerated for the fourth time in five-months and rose at its slowest pace since the fall of 2015.
Like other G7 nations, Canada continues to deal with the challenge of weak pricing pressure amid improving growth prospects.
Canada’s all-items consumer-price index in June increased +1% y/y, following a +1.3% advance in May. The market was expecting a +1.1% gain.
On a month-over-month basis, CPI in June declined -0.1%.
Lower energy and gasoline prices from a year ago were the main downward contributors on June CPI.
Note: The average rate of annual core inflation, based on three gauges used by the BoC, rose +1.4% in June vs. +1.3% in May.
Canadian retail sales climbed in May for a third consecutive month, powered by demand for new and used cars.
Ex-autos, retail receipts fell a tad.
The value of retail sales in May rose +0.6% on a seasonally adjusted basis to +C$48.91B. That exceeded market expectations for a +0.3%.
In volume terms, total retail sales rose by a faster +1.1% in May.
The loonie has taken flight and is currently trading atop of the overnight highs at C$1.2554, up +0.35%
The BoC expects household expenditures to remain robust in the near term, supported by job gains and firmer wage growth.
However, consumption is expected to ease as housing activity slows down, and consumers deal with elevated debt loads amid an environment of rising borrowing costs. Governor Poloz hiked rates +25 bps to +0.75% for the first time in seven years this month on an improving economy.