Canadian inflation rose faster than expected in May across all eight major components, spiking the Loonie as it supports the BoC’s view that ‘the North’ is emerging from its growth slowdown (and Poloz argument that rates will need to go higher).
The headline consumer price index jumped 2.4% from a year earlier, compared with 2% in April and versus a median economist forecast of 2.1%, Statistics Canada said Wednesday from Ottawa. It was the highest annual rate since October, boosted by increases in food and durable goods prices.
Core inflation, closely watched by policy makers, surged, with the average of the three key measures rising to 2.07%, the highest since February 2012.
The largest upside contributor to CPI on an annual basis was shelter costs, which rose 2.7%. Food and transportation were also major drivers.
And the Trimmed Mean inflation print jumped 2.3% YoY – the highest since March 2009…
Spiking the Loonie…
Presumably, BoC does not believe this spike is “transitory”.
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