Analysts at TD Securities are projecting Canada’s CPI inflation to firm to 2.2% YoY in November, owing to a significant tailwind from base-effects, with prices down 0.1% MoM.

• “Energy prices are the main catalyst for the month-over-month decline, as a change from summer to winter gasoline blends weighs on the price at the pump. While this is typical for Q4, last November saw a much sharper pullback in gasoline prices due to softer crude oil prices, and the base effects from this move should eliminate a 0.2pp drag from gasoline on a year-ago basis.
• Elsewhere, food prices should make a positive contribution on higher crop prices alongside a modest pullback in the Canadian dollar, while shelter should provide another tailwind as the housing market recovery feeds into higher homeowner replacement costs.
• Muted base-effects to CPI-trim and CPI-median suggest a high hurdle to any pullback in core CPI, which should leave the average of the three near 2.1% y/y and allow the BoC some patience as they monitor incoming activity data for signs of slowdown.”