Canadian Consumer Prices Fall Most In 11 Months

Canadian Consumer Price Index (AUG)
(MoM) (YoY) (Core YoY)
Actual: -0.3% 1.7% 2.2%
Expected: 0.1% 2.1% 2.3%
Previous: 0.1% 2.2% 2.3%
Front line inflation pressures unexpectedly cooled in Canada over August, suggesting the Bank of Canada will be able to focus on growth concerns and keep the benchmark lending rate untouched for the rest of the year. According to Statistics Canada’s data, the average price in the consumer basket dropped 0.3 percent last month, the biggest drop in prices since September of last year. The more pertinent year-over-year figures revealed similarly disappointing results on their end. In the year through August, the consumer price index rose 1.7 percent - the slowest pace of expansion since January and well below the BoC’s target rate. Even when the volatile food and energy components were excluded from the data, annual price growth still ticked lower to a 2.2 percent pace. Looking through the breakdown, it was clear that energy prices had the grandest effect on the data. The energy component dropped 2.3 percent on the month while gasoline prices specificially fell 7.7 percent over the period. Elsewhere, the broad goods group dropped 0.8 percent, though the services component advanced 0.3 percent. Other noteworthy detractors were food prices which slipped 0.4 percent and recreational and education costs which dipped 0.1 percent.
In the minutes after the release, USDCAD rallied 25 points to reach the overnight high of 1.0180; but the gains were quickly given shortly after reaching the peak.