The BoC’s preferred core inflation gauges, such as trimmed mean and weighted median CPI, surged in May, indicating a reacceleration of underlying inflationary pressures.Core services inflation, including shelter costs, remains very high. Shelter inflation is broadening, with rents continuing to soar and other drivers of shelter costs entering a new phase.Categories that previously contributed to disinflation, such as travel tours, accommodation prices, and food prices, reversed higher, suggesting that earlier disinflation may have been temporary.The BoC’s decision to cut rates seen as a policy error because it violated forward guidance and reacted prematurely to only four months of soft core inflation after a prolonged period of missing inflation targets.
This article was written by Arno V Venter at www.forexlive.com.
