Canada CPI preview
Canada CPI preview: CPI, due Friday, is expected to grow 0.4% (m/m, nsa) in April after the 0.3% gain in March. The CPI is projected to grow at a 2.3% y/y pace in April, matching the 2.3% rate of increase in March. The 2.3 y/y clip in March was the fastest rate since the 2.4% pace in October of 2014. Gasoline prices saw a sizable bounce in April versus March, driving our estimate. But housing prices were softer, perhaps providing some offset. The Ontario minimum wage gain should continued to underpin the annual growth rate. The BoC has maintained that an unwinding of the temporary factors are boosting CPI. Also, GDP growth slowed in Q1, while there is still spare capacity in the labour market. Finally, the BoC's outlook survey revealed that inflation expectations remain inside the BoC's 1-3% control range, albeit with a drift to the upper half of the band. But in our view, the main consideration here is that they can tolerate some heat on the CPI numbers given the economy if finally in expansion mode. Governor Poloz has maintained that better growth opens up more capacity (via investment and increased labour force participation), allowing them to tolerate faster inflation growth than they usually would. View the preview.