CAD: Headline CPI to gain 0.4% m/m in April – RBC CM

Economists at RBC Capital Markets are looking for Canadian headline CPI to gain 0.4% m/m in April (slightly higher than consensus of 0.3%), with a 7.0% m/m increase in gasoline prices in the month likely to contribute 0.2–0.3% of that.

Key Quotes

“Core prices should increase 0.2% m/m (again 0.1% pts above consensus), with trend increases in most components offsetting a negative seasonal month for travel services prices. On a y/y basis, headline inflation should increase to 1.7% (from 1.3% in March), largely due to a smaller y/y decline in gasoline prices, while growth in core prices should be stable at 2.1% y/y. The BoC has been consistent in seeing underlying inflation at ~1.7%, looking through the temporary impacts of both energy prices and the exchange rate.

March retail sales are expected to be weak (consensus -0.6% m/m; RBC -0.7%) following cumulative gains of 2.4% in January and February. Indications are that auto sales declined in the month, but they remain in high single digits on a y/y basis. With gasoline receipts expected to be flat m/m, we see a 0.5% m/m decline in core sales (ex auto & gas) following a cumulative 3.1% gain in the first two months of the year.”