🇨🇦❗️Cable FX Macro Weekly Note: Canada June Consumer Prices

**As seen in Risk In The Week report 07/14/23, subscribe at cablefxm.co.uk/reports

Headline prices eased by one full percentage point in May to 3.4% Y/y, this was in line with expectations. The monthly pace printed at 0.4%, core prices expanded by 4.4% Y/y, the trim/median core average slowed to 3.9% from the prior 4.3%. Most of the price acceleration came from travel and mortgage interest in May, energy declined by 0.8%, goods prices eased to 0.1%, services prices were steady at 0.5%. Economists see the headline easing further to 3.1%, this would leave prices slightly above the BoC’s inflation target band of 1%-3%. The central bank lifted its key policy rate by 25bps in July, the MPR showed inflation projections revised higher, the BoC now sees CPI at 2.9% in 2023 vs prior 2.5% and at 2.2% in 2024 vs prior 2.1%. The desk at RBC expects the headline rising by 2.9% (inside the target range) as they note energy prices easing and food prices stabilizing, they also mentioned mortgage costs rose by a record 30Y/y in May. RBC said that the BoC will be more focused on the M/ m core CPI pace. More recently, analysts at BMO pointed at a relationship between population growth and consumer prices, they added that the immigration intensive policy from the government is likely to make the BoC's mandate harder. BMO sees a short-term rise in inflation, they expect the headline to increase by 3.1% Y/y