Canada: Downside surprise on inflation and retail sales - TDS

Canada’s headline inflation fell to 2.2% y/y in September, well below the consensus for 2.7% and down 0.4% on the month, notes the research team at TD Securities.

Key Quotes

“This accompanied a drift lower in measures of core inflation to 2.0% on average.”

“Retail sales also surprised to the downside at -0.1% m/m and fell 0.3% on a volumes basis. This will act as a headwind to industry-level growth in August although we still track Q3 growth above BoC projections at 2.1%.”

“FX: CAD has benefited from both positioning and the sell-off in rates the past few months. This release pours some cold water on the optimism, especially since much of the good news has been priced in.”