Canada: Consumer prices likely jumped in January – BMO CM

Benjamin Reitzes, Senior Economist at BMO Capital Markets, expects that the Canadian consumer prices likely jumped in January, as energy prices continued their upward march in the month.

Key Quotes

“January is the start of a seasonally strong period for CPI, as most of the annual increase in prices generally comes in the first five months of the year. Gasoline prices look to be up about 3%, with the new carbon tax in Ontario and Alberta providing an extra lift (other energy prices were lifted as well). However, Ontario cutting the provincial sales tax from electricity bills will offset some of the inflationary impact of the new carbon taxes. Our call on CPI would push annual inflation up two ticks to 1.7%.”

“This is the third month we’ll be seeing the new trio of the Bank of Canada’s core CPI measures. The trio averaged 1.7% in December, ranging from the common component’s 1.4% to the weighted median’s 2.0%. We anticipate the average of the trio will hold about steady, reflecting the still sizeable spare capacity in the Canadian economy.”