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"We're seeing a bit more strength than we'd expect given that the pass through from the Canadian dollar which has been lifting that more selective measure should be fading slowly. So it suggests that underlying inflation pressures in Canada are a bit stronger than we would have expected given that the economy has slowed".
- Thomson Reuters
Last Friday the year-on-year Canadian Consumer Price Index (CPI) slowed down at a higher pace than was first anticipated.The figures, as reported by Statistics Canada, were at 1.5% growth, rather than the 1.6% forecasted, also compared to 1.7% in April. The main reason for such a weaker reading were food prices, as they also rose less than expected in May, compared to the April's data on an annual basis. Moreover, the food market prices grew at the slowest rate in over two years, having a significant effect on the overall CPI. As a result, the Canadian Dollar experienced downward pressure against its US counterpart, being that it had already reached a two-week low last week last week. However, the food sector was not the only reason of the slower inflation rate growth, as oil prices kept falling and weighing on the economic situation.
Meanwhile, the Bank of Canada reported year-on-year data fell in line with expectations, having posted a 2.10% figure, down from the 2.20% in April. The month-on-month data, on the other hand, showed a 0.1% percentage point increase, but inflation does not seem to be a big concern for Canadian central bank, as the figures are relatively according to its expectations.