This article has been translated from English to Gen Z Slang.
Yo, Canada’s inflation rate is on the move, hitting 1.9% y/y in June from 1.7% in May. Basically, exactly what the analysts said was gonna happen. 🔮
Meanwhile, the core inflation vibes are still stuck at a strong 3%, totally crushing any dreams of the Bank of Canada (BOC) cutting rates at the July 30 meet-up. 🏦🙅♂️
Peep the deets from June’s CPI report:
- Headline CPI rose by 1.9% y/y in June (up from 1.7% in May), ticking up by 0.1% m/m
- Core CPI-median ramped up to 3.1% (from 3.0%), while CPI-trim kept it chill at 3.0%
- The 3-month annualized core inflation hit a high score at 3.5%, the highest in six months 💥
- Inflation in durable goods sped up to 2.7% y/y, thanks to those spicy tariffs
- The odds of a rate cut on July 30 dipped to less than 10% 💔
The bump in headline inflation came from a smaller dip in gas prices (-13.4% vs -15.5% in May) and quick price growth in durable stuff. ⛽💸
Passengers' car prices cruised up by 4.1% y/y, and used car prices finally nudged up by 1.7%, breaking their 18-month slump. Furniture prices hopped 3.3%, while clothes and shoes took a 2.0% jump as businesses were like, "Hey, tariffs are a thing!" 🛋️👚
Food inflation decided to chill a bit, with grocery prices cooling off to 2.8% from 3.3%. Fresh veggies took a dip by 3.1% y/y – first time since October 2021. 🥬✨
Link to Canada’s June CPI Report
This week’s news put the BOC in a tight spot, caught between a rock and sticky inflation vibes. Core inflation be playing hard to get, hanging tough around 3%, way over the bank's chill levels, while the big economic picture slows down. Housing costs are easing, but in slow-mo, chilling at 2.9%. 🏠😅
The mix of stubborn core inflation, solid job growth, and ongoing US trade drama is making things super complicated for the BOC’s next move. The Canadian clapback with tariffs on US imports is adding pressure, especially on durable goods, making it hard for the BOC to justify dropping rates. 🎯
If we're talking September, the market's gotta see serious drops in core inflation or a wild economic downturn, neither of which seems to be in the cards right now. 🎳
Until then, the BOC can just play it cool and wait for the universe to show some chill signs that inflation is gonna snuggle back to its target. 🧐✨
Canadian dollar vs. Major Currencies: 5-min
Overlay of CAD Pairs vs. Major Currencies Chart by TradingView
The Canadian dollar took a dip after the CPI drop, but bounced back like “surprise!” when traders zoomed in on that persistent core inflation. Bond yields took a leap, with the 10-year hopping 9.6 basis points to 3.615%, the highest since last July. 📈🤑
The market U-turn came as traders looked past the main story and stayed fixated on that sticky core stuff. Core CPI stayed near 3%, and the part of CPI components running hotter than 3% inched up to 39% from 37% – a total migraine for Governor Macklem and the squad. 🧠💥
Mix it with June’s fire job report, which added 83,000 gigs, and the idea of a July rate cut quickly ghosted. Traders dialed back their expectations, slicing cut odds for July 30 to just 5% from 14%. 🚀💨
The Loonie clawed back its lost swagger against most of the big players, except for the U.S. dollar, which kept flexing with rising Treasury yields and fading Fed cut dreams. 🇨🇦💪
