Canada's Headline CPI Set to Firm in July as Core Inflation Remains Muted

TD Securities' Robert Both expects Canada's headline Consumer Price Index (CPI) to rise to 2.9% year-over-year in July, driven by higher gasoline and food prices.

The core measures CPI-trim and CPI-median are projected around 1.85%, below the Bank of Canada's forecasts, indicating a benign underlying inflation backdrop.

Both notes that despite headline CPI tracking above the BoC's forecast for 2.5%, the core measures are expected to remain low, reinforcing a focus on core rather than oil-driven headline moves.