- The Bank of Canada’s preferred core inflation measures, such as the trimmed average and weighted average CPI, rose in May, indicating a re-acceleration of core inflationary pressures.
- Inflation of basic services, including shelter costs, remains very high. Shelter inflation is growing, as rents continue to rise and other drivers of shelter costs enter a new phase.
- Categories that previously contributed to lower inflation, such as travel tours, accommodation prices, and food prices, rose, suggesting that the previous decline in inflation may have been temporary.
- The Bank of Canada’s decision to cut interest rates is seen as a policy error because it violated forward guidance and reacted too early to just four months of weak core inflation after a long period of missing inflation targets.
This article was written by Arno V Venter at www.forexlive.com.