The average consumer price index (CAD) year-on-year refers to the year-on-year change in the average consumer price index (CPI) of the Canadian dollar (CAD). The average consumer price index is a measure of inflation calculated by the Bank of Canada (BoC). It is designed to provide a more stable and reliable measurement of underlying inflation trends by excluding extreme price movements.
The Consumer Price Index (CPI) is a widely used measure of inflation that tracks average price changes for a basket of goods and services commonly consumed by households. It reflects the purchasing power of consumers and is considered a key indicator for monitoring price stability and assessing the cost of living.
On the other hand, the average CPI focuses on the average value in the distribution of price changes. It excludes more extreme price movements, such as those caused by volatile components such as energy and food prices. By doing so, the average CPI provides a measure of core inflation that is less affected by temporary and transitional factors..
The year-on-year change in the average consumer price index (CAD) year-on-year refers to the percentage change in the average consumer price index (CPI) compared to the same month or period of the previous year. The rate of inflation or deflation is shown during this specific time frame.
The CAD average CPI on an annual basis is important for policymakers, economists, and investors because it provides insight into underlying inflationary pressures in the Canadian economy. It helps the Bank of Canada shape monetary policy decisions, such as setting interest rates, to maintain price stability and support sustainable economic growth..
It should be noted that the Canadian dollar average CPI year-on-year is just one of several inflation metrics used in Canada, including the headline CPI, the core CPI, and various other metrics
Rising consumer prices in May reflects increase in services and goods
In May, the consumer price index (CPI) rose 2.9% year-on-year, compared to 2.7% in April. The acceleration in the main consumer price index is largely due to the increase in prices of services, rising 4.6% in May after a 4.2% increase in April. The fastest growth in service prices was driven by cellular services, travel tours, rentals, and air transport. Commodity prices rose 1.0% at the same rate as in April..
In terms of change month-on-month, the CPI rose 0.6% in May, largely due to increased travel. On a monthly basis, the index rose 0.3% in May..
It is worth noting that the change in the consumer price index (CPI) over the 12 months and prices of services reflects the current impact and the impact at the same period of the previous year. In terms of cellular prices, they fell at a slower pace year-on-year in May (-19.4%) compared to April (-26.6%). This was partly due to lower prices for cellular services in May 2023, which fell by 7.8% month-on-month. In terms of travel, tours and air transport prices, they rose at a faster pace year-on-year. In May, flight fares increased by 6.9% and air transport by 4.5%. The fastest year-on-year growth was driven by monthly increases in travel tours (+10.4%) and air transport (+2.3%)
On the other hand, the prices of food purchased from stores increased by 1.5% year-on-year in May, this is the first acceleration since June 2023. On a monthly basis, grocery prices rose 1.1% in May. This monthly increase was the most recent data available to me from September 2021, and I cannot provide more updated information on the CPI in May 2024. For up-to-date information
Canadian inflation rises in the USDCAD pair
The USD/CAD pair saw a sharp sell-off in the New York session on Tuesday. This is due to Statistics Canada’s May CPI report , which showed an unexpected rise in price pressure compared to the previous reading in April. Growing price pressure This means it can be difficult to expect a rate cut by the Bank of Canada (BoC). in the future. The Bank of Canada has already started the policy easing campaign at its last meeting at the beginning of June..
According to the CPI report, the annual inflation rate increased by 2.9%, an unexpected increase. Investors also expect price pressures to ease to 2.6% from the previous reading of 2.7%. On a monthly basis, the headline CPI rose 0.6% compared to the previous reading of 0.5%. The Bank of Canada’s core consumer price index, which excludes eight volatile elements, rose at a faster pace of 0.6% m/m compared to expectations and a previous reading of 0.2%. On an annualized basis, core inflation data accelerated to 1.8% from 1.6% in April..
Meanwhile, the US dollar index (DXY) is rebounding after the correction to approach 105.40. The rise follows comments by Federal Reserve Governor Michelle Bowman, in which she pointed to tightening monetary policy and the current inappropriateness of cutting interest rates. This contributed to changing expectations of a rate cut until 2025, and warned of further hikes if inflation dissipates or reverses..
This week, the US Core Consumer Expenditure Price Index (PCE) data for May will be the main reference for countriesThe currency occupies an important position in the global economy and is considered one of the most traded currencies in the world, so the developments of the USD/CAD pair interest investors and traders.
