Canadian headline inflation likely to have accelerated in February

Canadian headline inflation data for the month of February is set to release tomorrow. According to a TD Economics research report, the consumer price inflation is likely to have come in at 1.5 percent, reflecting a 0.7 percent rise in prices on the month. Gasoline prices lend a solid sequential boost, with strong gains in food prices as well.

Elsewhere, most of the sequential gains are likely to have resulted from travel services and MIC. Airfares, the other source of oneoffs, look benign this month taking in account February seasonals and the near full correction last month.

The previous jump in the rent index is unlikely to be repeated and is one source of downside risk. It is likely to be volatile going forward, owing to the methodology changes. Finally, core inflation is expected to have been stable at 1.9 percent on average but risks continue to be tilted to the downside on the back of poor growth dynamics and soft wage growth.

“Looking ahead, the recent pickup in fuel prices along with the new CPI basket weights suggest a slightly higher trajectory for our forecast at 1.6 percent in Q1 vs 1.5 percent, though still below the BoC’s forecast of 1.7 percent”, added TD Economics.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -19.4464 while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -28.4356 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex