Canada’s annual inflation rate increases to 1.9% in January #CanadaFinance

TORONTO (Reuters) – Canada’s annual inflation rate rose 1.9% in January, up from 1.8% in December as lower prices helped by a sales tax reprieve were partly offset by higher cost of gasoline and natural gas, data showed on Tuesday.

Market reaction: [CAD/]

Link:

COMMENTARY

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS AT SCOTIABANK

“The punch line is the underlying core data are too warm, in my opinion, for Bank of Canada to continue easing.”

“Going forward, I think we’ll see a rise in the headline inflation until February, but only about half of the GST, HST increase will flow through because only half of the ones will be captured in, the reverse of what happened in December, January.”

JULES BOUDREAU, SENIOR ECONOMIST AT MACKENZIE INVESTMENTS

“In terms of the headline, the core numbers pretty much all the measures are coming to where we expected it to be. It is the second number in the row where we are probably not going to get too much out of it because of the GST break, so we are trying to overlook it. I think from here on the Bank of Canada will be looking at what Donald Trump will say in terms of tariffs and the next deadline for tariffs. I think that is 80% of everything that is going to matter for the next six months for sure. And then we are going to get a reaction from the federal government in terms of new spending.”

(Nivedita Balu and Divya Rajagopal; Editing by Caroline Stauffer)