Canadian headline consumer price inflation likely accelerated in March

Canadian consumer price inflation is expected to have accelerated in March. According to a TD Economics research report, the headline inflation is likely to have risen above target to 2.5 percent year-on-year, reflecting a 0.5 percent sequential acceleration on the month. The latter is likely to translate to a seasonally adjusted rise of 0.3 percent sequentially. Energy prices are expected to have been a net positive on higher gasoline prices.

Also, food prices are expected to have boosted as well, aided by the depreciation of the Canadian dollar in February and March, while t he food away from home category might see continued upward pressure after the Ontario minimum wage hike. Excluding food and energy, shelter prices are expected to have moderated slightly as the tailwind from higher mortgage interest costs fades while new home price rises continue to be weak on the back of the pullback in the Ontario market.

However, outside of that, risks are usually to the upside. Currency pass-through is a net positive this month given the 4 percent cumulative depreciation in CAD since January, stimulating categories such as apparel and vehicle prices.

“Looking ahead, we expect headline inflation to remain in the mid-2 percent range largely on energy prices, whereas core inflation measures should hover closer to 2.0 percent. That is, inflation remains largely in check”, added TD Economics.

At 21:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -38.5908, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 112.28. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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