CAD: Retail Sales, CPI: Not Screaming For Rate Hikes But Gives BoC Comfort To Hike In October - CIBC

CIBC Research discusses the reaction to today's Canada's retail sales and CPI prints .

"Two data releases printing in line with expectations in terms of headlines, and with some mixed messages in terms of the underlying detail. Headline CPI fell 0.1% in August, for an annual rate of 2.8%, both in line with the street's view. A reduction in air transportation costs, which had proved a big positive in the prior month, contributed to the deceleration. However, even with that ex-food/energy CPI rose by a trend-like 0.2% in August, which we had expected to be slightly weaker after an outsized gain in July. Also highlighting slightly higher underlying inflation were the BoC's three new measures, which each accelerated by a tick in August to average 2.1%.

While that's not screaming for rate hikes, it gives the Bank comfort to hike in October even if GDP growth slows a little from Q2's pace.

With the CPI figures a little stronger in the detail than the headline, that could be slightly supportive for the C$ today and see yields rise a little," CIBC argues.