Canadian CPI Preview: Forecasts from five major banks, inflation to breach 6%

Statistics Canada will release March Consumer Price Index (CPI) data on Wednesday, April 20 at 12:30 and as we get closer to the release time, here are the forecasts by the economists and researchers of five major banks regarding the upcoming Canadian inflation data.

The March Canada inflation rate is expected to rise by +0.9% MoM from +1% MoM, clocking in at +6.1% YoY from +5.7% YoY.

TDS
“We look for CPI to firm to 6.1% YoY in March, with prices up 0.9% MoM. Energy will provide the main driver, led by an 11% increase in gasoline, alongside another significant contribution from food. Motor vehicles, clothing, and shelter should help drive strength in the ex. food/energy aggregate, while the BoC’s core inflation measures should firm to 3.6% YoY on average.”

RBC Economics
“Canadian CPI report is expected to show a further acceleration to 6% in March. That would top the 5.7% February reading that was already the highest since 1991. The BoC’s newly-minted forecast shows inflation averaging 5.3% in 2022. With labour markets also looking exceptionally strong, there’s no reason for interest rates to still be at emergency low levels. The BoC already hiked the overnight rate by 75 basis points over the last month and a half. We look for another 100 bps worth of increases to bring the rate to 2.0% by October.”

NBF
“While we expect strong print for CPI ex-food and energy given labor shortages and supply chain issues, the headline number could also have been upwardly impacted by surging gasoline prices. Elsewhere, food inflation should have remained strong, driven by the upward rise in commodity prices. All in all, we expect the headline index to have increased 0.9% MoM before adjustments for seasonality, a result which would allow the annual inflation rate to increase four ticks to 6.1%. The annual rate of the common CPI, meanwhile, could move up from 2.6% to 2.7%.”

CIBC
“March should hopefully be the peak for Canadian inflation, with the price of oil having moved off its highs in recent weeks. However, what a peak it will be, with the 6.3% reading we forecast more than triple the 2% target and the highest since early 1991. Energy, food and housing costs will continue to be the key drivers but look for further signs of a broadening in inflationary pressure, including an upward move in the average of the BoC’s three inflation measures. While goods price inflation decelerated somewhat in the US CPI figures released earlier, that was largely due to a decline in used car prices that aren’t tracked in the Canadian inflation basket.”

Citibank
“Canada CPI NSA MoM (Mar) – Citi: 1.0%, prior: 1.0%, CPI YoY – Citi: 6.2%, prior: 5.7%. We expect headline CPI to rise 1.0% MoM and climb to 6.2% YoY in March, which would be more or less consistent with ~6%YoY inflation in H1’2022 forecast by the BoC in the April MPR.”