CAD: Seasonal factors anticipated to drive a stronger CPI – TDS

By FXStreet Research Team at TDS, suggests that the seasonal factors in Canada are anticipated to drive a stronger CPI print.

Key Quotes

“A depreciating currency and falling commodity prices will do battle once again to determine the net impact on February CPI. While lower energy prices will exert a drag, the former influence paired with strong seasonal adjustment factors will carry the day.

The headline price index is forecast to have increased by 0.4% m/ m (after controlling for seasonality, headline prices are expected to fall by 0.2%). Much of this gain reflects the influence of higher recreation and clothing prices. And while the currency did recover from its January trough, in level terms the CAD remained low through all of February which reduced the incentive for firms to pass along the savings to consumers.

A strong base year effect will pull headline inflation lower to 1.6% as energy prices increased by nearly 7.0% last February. The non-seasonally adjusted core price index should be similarly well-supported, rising by 0.6% m/m while the index will show a far more modest 0.2% monthly gain after accounting for seasonality. On a year ago basis, core inflation is expected to nudge a touch higher to 2.1% …read more

Source:: FX Street