Canada CPI inflation YoY 1.9% vs 1.9% estimate. MoM 0.1% versus 0.1% estimate

• Prior month 1.9%
• CPI MoM 0.1% versus 0.1% estimate. Prior month -0.4%
• Core CPI MoM 0.4% versus -0.3% last month
• CPI YoY 1.9% versus 1.9% estimate
• Core CPI YoY 2.1% versus 1.8% last month
• CPI Median YoY 2.7% versus 2.5% estimate. Last month 2.6% revised from 2.4%
• CPI Trim 2.7% versus 2.6%. Last month 2.5%
• CPI Commopn 2.2% versus 2.0% last month

In January, rising energy prices, particularly gasoline and natural gas, drove inflation higher, though this was partially offset by price declines due to the GST/HST tax break. Food prices fell 0.6% year-over-year, the first annual decline since 2017, led by a record 5.1% drop in restaurant food prices.

Energy prices rise:

Energy prices rose 5.3% year-over-year in January, accelerating from 1.0% in December, driven by higher gasoline and natural gas prices. Gasoline prices increased 8.6% YoY, up from 3.5% in December, with Manitoba (+25.9%) seeing the sharpest rise due to the partial reintroduction of its provincial gas tax. Natural gas prices rose 4.8% YoY in January, rebounding from a 5.5% decline in December, with the largest monthly increase in British Columbia (+12.8%).

Food prices fell:

• Restaurant food prices fell 5.1% YoY in January, a record drop, exceeding December’s 1.6% decline.
• Alcoholic beverage prices decreased 3.6% YoY, following a 1.3% drop in December.
• Toys, games (excluding video games), and hobby supplies fell 6.8% YoY, slightly less than December’s 7.2% decline.

A look at the gainers and losers by sector shows:

The money markets are now pricing:

• 8 bps of cut for next meeting vs 11 bps before the announcement
• For the end of year, the markets are pricing 41 bps of cutsvs 45 before the release

The USDCAD has moved modestly higher and in the move has run into the falling 100-hour MA at 1.42154.

This article was written by Greg Michalowski at www.forexlive.com.