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Bank of Canada Can Look Past Energy-Driven Inflation in July CPI, Rosenberg Research Says

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Canada's July consumer price index reading was driven largely by energy-related costs, with limited signs of broader price pressures building across the economy, according to Rosenberg Research in a note Tuesday.

CPI accelerated to 3.0% annually in July from 2.8% in June, while core inflation excluding food and energy edged up to 1.9% from 1.8%, according to Statistics Canada on Monday. Both readings came in slightly above market expectations of 2.9% and 1.8%, respectively. Median core inflation rose to 2.0% from 1.9%, also exceeding the 1.9% consensus forecast.

Excluding energy-related components, inflation would be closer to 1.8% annually rather than 3.0%, while core inflation would be around 1.6% instead of 1.9%, Rosenberg said.

For the Bank of Canada, the data suggests that higher energy prices have yet to trigger broader inflationary pressures, potentially giving policymakers room to look past the temporary energy-driven increase, Rosenberg added.

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