-- The Canadian government on Tuesday announced to expect a spring fiscal update on April 28 and a gasoline tax cut decision that offers minimal effects, said Scotiabank.
The fuel cut will knock about 0.1% off the month-over-month April consumer price index when prorated and probably another 0.1 off May when the full month is affected, noted the bank.
Then the cut shakes out from June until September, after which its reversal would add back around two-tenths to October CPI, stated Scotiabank.
Key are whether it's just a cut for the Summer driving season, whether margins across refiners and retailers crowd in the space, and whether it gets passed on or absorbed in the profit margins of businesses that use a lot of fuel, pointed out the bank.
The Bank of Canada's preferred core measures of inflation-trimmed mean and weighted median CPI exclude the direct effects of changes in taxes and the indirect effects are likely to be "very small," according to Scotiabank.