Trevor TombeMar 19, 2024

Today's data: inflation!! A good report. Consumer prices up 2.8% over the past year in February, which is down slightly from 2.9% in January. Monthly-over-month changes were normal.

Details: https://www150.statcan.gc.ca/n1/daily-quotidien/240319/dq240319a-eng.htm?HPA=1 #cdnecon #cdnpoli

The Daily — Consumer Price Index, February 2024

The Consumer Price Index (CPI) rose 2.8% on a year-over-year basis in February, down from a 2.9% gain in January. On a seasonally adjusted monthly basis, the CPI rose 0.1% in February.

Show threadTrevor TombeMar 19, 2024
What's behind the change? Energy alone would have increased inflation to nearly 3.2% in February (which may explain why some were anticipating an acceleration). But other items, coms and food in particular, pulled things down.
Show threadTrevor TombeMar 19, 2024
Overall, food's contribution has shrunk back to normal (as anticipated). Remaining sources of price pressure are home ownership (mainly mortgage rates) and rent. (Note: doesn't mean BoC at 'fault', since lower rates could lead to price increases elsewhere.)
Show threadTrevor TombeMar 19, 2024
And over the past three months, food and goods inflation has been *negative*. This continues an encouraging trend over the past many months. This data again suggests inflation pressures eased considerably and BoC may loosen soon.
Show threadTrevor Tombe
Indeed, the key measures of the Bank of Canada have continued their strong decline. Three-month average of median/trim CPI measures are down to 2.3 and 2.4%, respectively. Great to see for #cdnecon.
Mar 19, 2024 at 1:14pmFedica
Show threadTrevor TombeMar 19, 2024
And while it's not normally reported by the BoC, since there are conceptual issues here, it's *possible* to reconstruct an implied 3-month average change in CPI common. That shows an even strongly drop. All three main measures firmly within target.
Show threadTrevor TombeMar 19, 2024
I've said I expect the Bank to Lower rates very soon (perhaps at its next meeting?). I'm probably wrong, and most others don't expect movement that soon. But it's data like this that has consistently been showing inflation pressures dropping that is behind my optimistic takes.
Show threadTrevor TombeMar 19, 2024
There are higher than normal price increases for several services, to be clear. Restaurants being an important one. But this is a very very different picture than prevailed in much of the data last year.
Show threadTrevor TombeMar 19, 2024
Where do we go from here? Well if things continue to be on target, next month will have 2.7% headline inflation. But then in April, that will drop sharply to 2.2%. (The month to watch!) Later in the year headline would fall below 2%, before returning to target early 2025.
Show threadBruce Acton 🇨🇦🇨🇦🇨🇦Mar 20, 2024
@trevortombe thanks for posting this info, I like your analysis and presentation.