**As seen in Risk In The Week 07/17/2022, subscribe at cablefxm.co.uk/reports
May consumer prices printed another leg higher at 7.7% Y/y from the previous 6.8%, this was the highest rate recorded since January 1983. The metric excluding gas increased by 6.3% Y/y, while the acceleration in the headline is attributed to gasoline rising by 12.0% on the month. On a M/m basis, CPI increased by 1.4% as the seasonal adjusted figure showed the fastest pace on record since the series started. Real wages continue to be negative as AHE rose by 3.9% Y/ y, this leaves income after inflation at -3.8%. Back in May, the StatCan introduced used vehicle prices to the index, these ticked higher by 2.2% M/m. Shelter costs came at 7.4%Y/y, unchanged from the prior month, while homeowners’ replacement cost rose by 11.1%. In June, Canadian consumer prices are seen rising as high food and energy prices feed into the economy. Economists at RBC say that oil jumped by another 4.8% in June, they say almost half of inflation has been driven by developments abroad Canadian borders. RBC also says that some components in the acceleration in prices have shown signs of easing as the largest domestic driver of domestic inflation, house prices, have shifted into reverse. We recently heard from the BoC as it delivered a 1% point rate hike, the desk at UBS says that front-loading rate increases will equal more rate cuts ahead, analysts at Wells Fargo Securities see the central bank slashing the cost of money during 2H 2023.
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