🇨🇦Cable FX Macro Weekly Note: Canada Sep. CPI

**As seen in Risk In The Week report 10/14/22, subscribe at cablefxm.co.uk/reports

Canadian headline prices eased to 7.0% from the prior 7.6%, this was the second consecutive decline in the figure and a miss from the consensus expectations of 7.3%. As a reminder, we have not seen headline consumer prices in Canada beat expectations sine May. On a monthly basis, inflation saw the first decline since December, the M/m figure came at -0.3%, prior 0.1%. One interesting divergence from U.S. CPI is the core figure, the August print came flat, while shelter decelerated by 0.1%. The largest monthly declines were seen in gasoline prices, down 9.6%, transport prices followed at -2.5%. Goods prices came in at -0.8% M/m, the second consecutive decline, services eased to 0.1%. After the release, BoC’s Governor Macklem said that inflation was headed in the right direction, however, he repeated this is still high. Heading into Friday close (10/14/22), he stated that it will take some time before policy rates feed into the economy. BoC’s Macklem also made reference to the tight labour market and noted this is generating inflationary pressures, he said the economy needs cooling in the jobs market before inflation comes down. Economists at BMO say they will be highly attentive to both BoC’s Business Outlook Survey and the Sep. CPI print, they add that these two reports will set the tone for the BoC’s interest rate decision later this month. BMO says that any upside surprise in the CPI or BOS could tilt the balance towards another 75bps hike from the central bank. We remind you that the BoC has tightened policy by 300bps over the course of this year to 3.25%, markets expect the central bank to deliver an additional 100bps of tightening by end of year. The desk at CIBC noted U.S. prices excluding energy posting relatively robust increases, they say this could spill over into Canadian CPI, CIBC sees upside risks to the headline.