Rosenberg Research said Tuesday that Canada's May inflation data offered little support for a more hawkish Bank of Canada stance, noting that only 38.6% of the core consumer price index basket is running above the central bank's 2% target.
That compares with nearly 80% at the peak of the inflation cycle and a long-term average of 49%, according to Rosenberg Research.
Some market players noted concern over a nearly 0.3% monthly rise in Canada's May core inflation, which excludes food and energy, and which posted the highest reading this year, pointed out Rosenberg. However, a broader measure that strips out energy-sensitive components, such as airfares and travel services, points to a much softer gain of around 0.15% on the month, with the annual rate just less than 1.6%.
"Not much to really be concerned about because there is no evidence of the energy shock broadening out into the pricing system, generally speaking," according to Rosenberg.