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CIBC On the Week Ahead In Canada Economics

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Canada will next week get data showing the two sides of the 'stagflation' impact stemming from higher oil prices, notes Avery Shenfeld.

On the 'flation side, CPI due Tuesday looks set to show an "outsized jump" that will take headline inflation north of 3%. While the 12-month core rate should be much tamer, the monthly change might see a bit of upside from airfares, among the first items to be hit by a passthrough from fuel costs, Shenfeld said. But none of that will matter for central bank policy if the Middle East war ends soon enough, he added. CIBC forecasts a 0.8% rise in April CPI month over month, compared to a consensus gain of 0.6%, and a 3.2% year over year number, compared to a consensus 3.1%. On CPI Core Median, CIBC estimates 2.2% year over year, in line with consensus, and on Trim it estimates 2.1% year over year, also in line.

On the 'stag side, retail sales next Friday will be weak in after-inflation terms, as higher gasoline prices flatter the nominal gain, but leave diminished spending room for other retailers, Shenfeld said. CIBC sees a 0.6% rise in total retail sales for March, in line with consensus. The consensus for ex-auto in March is 0.9%.

Markets will be closed Monday for the Victoria Day holiday. Tuesday will see the auction of $18.2 billion in 3-M Bills, $6.4 billion in 6-M Bills and $6.4 billion in 1-YR bills. Building Permits data for March will also come out Tuesday, with consensus set at 3.7%.

Wednesday will see the auction of $5.5 billion in 2-YR CANADAS. Then Friday will bring April Industrial Product Prices and Raw Materials data, as well as the Senior Loan Officer Survey from the Bank of Canada.

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