Canada December CPI 1.8% y/y versus 1.9% anticipated

• Prior y/y reading was +1.9%
• CPI m/m -0.4% versus -0.4% expected
• Prior m/m reading was 0.0%
• Core CPI m/m +0.3% versus 0.4% last month
• CPI median 2.4% versus 2.4% expected . Last month 2.6%
• CPI trim 2.5% versus 2.5% expected . Last month 2.7%
• CPI common 2.0% versus 2.0% last month
• CPI BOC core y/y 1.8% versus 1.6% last month
• CPI BOC core m/m -0.3% versus -0.1% last month

USD/CAD was trading at 1.4422 before the report but ticked up slightly afterwards despite the miss as there were some effects of the GST tax holiday in here (Canada’s VAT). The odds of a BOC cut this month inched higher on the data.

The report said travel costs spiked, with traveller accommodation up 13.6% m/m. A notable surge in BC accommodation prices (+62.0% m/m) was linked to a “high-profile concert series” which was Taylor Swift’s concert.

Housing remains a drag but the forward-looking numbers are showing downward pressure:

• Shelter costs rose 4.5% y/y
• Rent increases still hot at +7.1% y/y
• Mortgage interest costs up 11.7% y/y, though showing 16th straight month of deceleration

The GST holiday runs through mid-Feb so it’s going to take a few months to get a cleaner look at what’s happening to prices.