**As seen In Risk In The Week report 11/11/2022, subscribe at cablefxm.co.uk/reports
September's consumer prices eased at a slower rate than expected as the headline metric came in at 6.9% vs the consensus expectations of 6.7%. The average of the BoC’s core measures ticked at 5.30% Y/y, unchanged from the prior, the core median came in at 4.7% Y/y. On a monthly basis, the broad measure expanded by 0.1% vs the prior -0.3%, the core and the shelter figures rose by 0.3% and 0.5%, respectively. Gasoline prices registered a third consecutive month of declines, the September figure fell by 7.4%. This echoed with the broad energy basket as it decreased by 4.4% on the month, goods prices fell again while services expanded at 0.3% as the sector shows no signs of impulse easing. Despite the higher than estimated inflation prints, the Bank of Canada refrained from delivering another ‘super-sized’ rate hike and lifted its overnight rate by 50bps, this was lower than expectations. The central bank was vocal on a slowdown in household demand and business spending, a sharp drop in housing market activity was also cited. The October MPR downgraded growth, while inflation forecasts saw the year-end 2023 projection at 2.8%, inside the BoC’s target. Economists at RBC say that about 63% of the CPI basket is expanding above the central bank’s target range over the three months into September, this however is lower than the prior 77% in July. RBC notes that this might have been the reason behind the 50bps hike from the BoC in October. The desk says that food inflation momentum is likely to have extended, while core measures are expected to print unchanged from the previous as home sector weakness is offset elsewhere. Despite this, broader measures of underlying inflation are showing early signs of easing, RBC says.
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