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

**As seen in Risk In The Week report 11/17/23, subcribe at cablefxm.co.uk/reports

Consumer prices eased to 3.8% Y/y in September from the prior 4.0%, the headline missed the consensus forecast of 4.0%. Excluding gasoline prices, inflation rose 3.7% Y/y, grocery inflation showed signs of progress as it dipped to 5.8% from 6.9%. Bank of Canada’s preferred 3M average of core inflation fell to 3.67% Y/y from 4.29%, the September measure saw a reversal from the prior month’s acceleration. Common core inflation in Canada is now at its lowest since January 2022. Following the data release, markets started reducing rate hike bets for the BoC October monetary policy meeting, the central bank left the O/N rate unchanged at 5.0%.

Economists at CIBC said disinflationary pressures should extend into November, however, they flagged risks of sticky inflation leaving prices above target into early next year. Despite this, CIBC noted drivers of inflation becoming more narrowly based and expects the BoC’s core measure to fall below the headline, they added that these developments should enable the BoC to cut rates as soon as 2Q 2024. Analysts at RBC said that slowing growth is likely to cap inflationary pressures ahead, their proprietary tracker of consumer transactions is showing a slowdown in spending into October.