Canada – The consumer price index fell 0.1% in April, allowing the year-on-year inflation rate to drop to 0.8%, the lowest since November 2013. In seasonally adjusted terms, CPI also fell 0.1%, as declines for transportation, clothing/footwear, shelter and recreation/education more than offset gains in the other four broad categories. The core CPI, which excludes eight of the most volatile items, was up 0.1%, but that couldn’t prevent a one-tick drop in the year-on-year core inflation rate to 2.3% (from 2.4%). In seasonally-adjusted terms, core CPI was flat. Assuming seasonal patterns hold in May and June, CPI is on track to grow in Q2 by 0.7% annualized for the headline and 2.2% annualized for the core, close to the Bank of Canada’s April’s Monetary Policy Report estimates of 0.8% for the headline and 2.1% for the core. So, don’t expect much change from the central bank’s policy stance for now.
Retail sales rose 0.7% in March, after a downwardly revised 1.5% increase in the prior month. Sales rose in 7 of the 11 subsectors, including a 1.5% increase for autos/parts dealers. Excluding autos, sales rose 0.5%. There were increases observed for sellers of furniture, building materials, food/beverage, health/personal care products, clothing, and miscellaneous items which dwarfed decreases for sellers of electronics, gasoline, sporting goods, and general merchandise. In real terms, retail sales rose just 0.1%. Overall, the Canadian retail results were much better than expected even considering the downward revision to the prior month. The retail volume increase adds to solid performances reported earlier from factories and the wholesale sector, suggesting Canada’s GDP growth accelerated in March, i.e. a good handoff to Q2. The Q1 picture, however, is less rosy with real retail sales contracting at an annualized pace of 1.6%, the worst since 2012.
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