Canadian CPI growth may be close to peak but still surging in June

  • Canadian inflation pressures continued to surge in June
  • Home prices have shifted from big tailwind to headwind for price growth
  • Industrial price growth edging lower as global supply chain disruptions show signs of easing
  • Markets are betting that aggressive central bank rate hikes will cool inflation pressures





 

June 22, 2022

  • Surging inflation is cutting into year-ahead GDP growth expectations.
  • Close to half of Canadian CPI growth fueled by global price pressures, with home buying costs adding to domestic growth.
  • Cooling housing market could bring some relief; although price pressure has also continued to broaden.
  • Wage growth should continue to accelerate, as labour shortage issues grow more acute.







 


May 18, 2022

  • Industrial input and output prices are still surging, keeping pressures broadly based
  • Grocery prices rising at fastest pace since the early 1980s
  • But central banks rate hikes are expected to slow demand
  • Home buying costs (accounting for ~20% of year-over-year CPI growth) will start to slow on lower housing demand






 


April 20, 2022

  • Higher headline inflation partly a result of rising gas prices after Russia invaded Ukraine
  • But price pressures continued to broaden
  • Geopolitical headwinds also adding pressure to business input costs
  • Inflation expectations remain elevated for the near-term, although anchored around 2% in longer-run






 


March 16, 2022

  • More goods and services seeing faster price growth.
  • Invasion driving commodity price volatility.
  • Market expects inflation to stay above 3% over 5 years.






 


February 16, 2022

  • Prices for commodities and industrial inputs continued to edge higher.
  • To-date, home and auto remain the biggest driver for price growth but pressure’s also broadening.
  • Strong household purchasing power will put a floor under consumer demand and inflation trends in the near-term.






 


January 19, 2022

  • Surging house prices underpinning higher shelter costs.
  • Share of goods/services seeing higher price growth continuing to broaden.
  • Wage growth to pick-up; recent gains more present for highly-skilled jobs.







 


December 15, 2021

  • Inflation pressure in Canada has been broadening, with more goods and services seeing above-target levels of price growth.
  • Energy commodity prices jolted on Omicron related concerns.
  • Wage pressures are building, although unevenly across industries.





 


November 17, 2021

  • Even excluding higher shelter costs, prices in Canada have bounced back above pre-pandemic trends.
  • Inflation pressure is broadening with more of the consumer basket seeing above-target rate of growth.
  • Inflation expectations, from market, businesses and consumers are still edging up.






 


October 20, 2021

  • Share of CPI basket seeing above-trend price increases from pre-pandemic levels still rising
  • Energy prices have increased; industrial input prices remain elevated
  • More businesses reported capacity issues related to shortages of inputs and supply chain disruptions in Q3







 


September 15, 2021

  • Shelter prices have surged but the pace of growth is now slowing
  • Motor vehicle production disruptions expected to keep vehicle prices high
  • Supply chain disruptions and increased services demand taking over as driver of price growth






 


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August 18, 2021

  • Headline CPI growth still impacted by ‘transitory’ factors but growth in industrial prices beginning to slow
  • Slower demand for homes will limit further gains in accommodation related expenses
  • Rising agriculture commodity prices and firming consumer demand to keep floor under price growth






 


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July 28, 2021

  • Cars and homes accounted for much of price growth in June
  • Investors are still betting that the inflation spike will prove temporary
  • Cooling commodity prices to temper soaring input costs






 

June 16, 2021

  • Consumer price increases were more broadly-based in May
  • Market inflation expectations plateau albeit at elevated levels
  • Rising input costs pose a key hurdle for businesses though some offset from stronger loonie







 


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May 20, 2021

  • Inflation pressure still manageable but broadening
  • Market expectations have dialed higher
  • Rising Input costs and firming demand to act as tailwinds for price growth






 


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Claire Fan is an economist at RBC. She focuses on macroeconomic trends and is responsible for projecting key indicators on GDP, labour markets as well as inflation for both Canada and the US.

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