The September inflation numbers will give the Bank of Canada no reason to change its stance on interest rates, according to economists.
On a year-over-year basis, the headline consumer price index fell to 6.9 per cent from seven per cent. The analysts had expected a lower rate.
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The core inflation reading rose after cooling slightly in August.
The increase in grocery costs was the fastest in 41 years, as prices for food continued to rise.
What economists had to say about the cost of living and the interest rate announcement next week.
The Bank's core inflation measures were unchanged in September but, given that we expected a decline due to more favorable base effects, that probably increases the odds of another 75 basis-point hike next week.
The data this week showing that housing starts in the apparently interest rate-sensitive construction sector surged in September leads us to believe that the bank is likely to press on with the policy.
Overall inflation fell to 6.9 per cent last month after peaking at 8.1 per cent in June. Canada is well below the latest loftier readings in the US, the Euro Area and Britain. Inflation is more than double what it was a year ago.
Food prices have been a flashpoint in Canada and many other major economies, and there was little let-up again last month, with adjusted prices jumping 1.2 percent month over month. The increase in grocery prices was the fastest in 33 years. Mortgage interest costs, homeowner repairs, and autos all went up in the month.
Even though gasoline costs took a big step back, inflation did not ease as much as expected. Underlying inflation is stuck at over five per cent. We expect a 25 basis-point move in December to take the overnight rate to four percent.
The Bank of Canada will hike rates by 75 and 50 basis points next week, and the markets will be split between the two hikes. Since we are starting to see the effects of higher interest rates show up more clearly, we are leaning towards a 50 basis-point rate hike. That is probably just the start of things to come.
There will be long faces at the Bank of Canada this morning.
The fall in gasoline prices is the main reason for the deceleration. The next month could see headline inflation heading in the wrong direction given that prices have reversed.
The Bank of Canada is set to raise its interest rates by at least 50 basis points next week, as the inflation dragon still hasn't been slayed.
Inflationary pressures are losing steam according to the recent trend in theCPI monthly changes. The three-month change in mostCPI components is below their year-on-year changes, suggesting that inflationary pressures may be close topeaking.
Inflation is decelerating, but it is still above the BoC's target of two per cent. We think the Bank of Canada will keep hiking interest rates. The BoC is expected to raise its policy rate by 50 basis points in October. There is a chance the BoC could hike 75 basis points, front-loading some of the increase, as inflationary pressures continue to broaden.
Falling energy prices dragged down Canada's headline inflation for the third month in a row The price of food and services continued to rise. There was no change in the inflation rate, which remained at five per cent.
Markets are expecting a 50 basis-point interest rate hike by the Bank of Canada next week as a result of today's lack of progress on inflation.
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