Scotiabank Previews This Week's CPI Data in Canada

12:38 PM EDT, 07/14/2025 (MT Newswires) -- Canadian consumer price index data for June will be updated on Tuesday at 8:30 a.m. ET, noted Scotiabank.

This is one of two reports before the Bank of Canada's next decision on July 30, pointed out Scotiabank. Governor Tiff Macklem has emphasized the importance of this pair of readings, while nevertheless also indicating unease toward persistent pressures on core inflation and the need for patience.

A seasonally unadjusted gain of 0.2% month over month, which translates into 0.3% month-over-month seasonally adjusted is estimated, stated the bank. Combined with year-ago base effects, this would translate into a rise of 2.0% year over year from 1.7% the previous month.

June is normally a seasonal up-month for prices and Scotiabank has gone with a conservative estimate of seasonal influences. Gasoline prices shouldn't be a material effect this time. The same goes for food. Shelter may be an upside risk as it was weighed down in April and May by the pass-through of the elimination of the consumer portion of the carbon tax and provincial measures into home energy costs. It will also monitor potential upside risk from travel-related categories such as airfare.

Key, however, will be the BoC's preferred core gauges, added the bank. The measures that matter are the month-over-month seasonally adjusted changes in trimmed mean CPI and weighted median CPI. The former strips out the top and bottom 20% of the CPI basket after ranking weighted contributions by component from highest to lowest and recalibrating what's left, while the latter measures the change in the price at the 50th percentile of the CPI basket ranked similarly. Looking at it in month-over-month terms reveals price pressures at the margin.

The year-over-year measures for trimmed mean and weighted median CPI are less useful.

These gauges are impossible to predict given a paucity of high-frequency data on the dozens of components and the high sensitivities to their weighted effects. With that caution in mind, the bank wouldn't be the least bit surprised to see them fall back down to earth after 4.5% month-over-month, SAAR readings by both in May and in light of the oscillating pattern over the months while nevertheless being hot throughout the past year-and-a-half.

As a consequence, what will matter will be the averaged trend, shown as a three-month moving average. It remains far "too warm" for the BoC to be contemplating easing, as inflation risk has yet to be licked into forward-looking risks to supply chains.

What will also matter will be evidence on the breadth of price increases, which has been on the rise.

As for tariffs, these core gauges exclude the direct effects of changes in all indirect taxes like property taxes, sales taxes and tariffs. They cannot, however, exclude any indirect effects and that's the part that reflects incidence effects and adds another layer of risk into the report.

A distinguishing feature of today's tariff wars, however, is that there may be added supply chain turmoil imported into Canada, such that only relying upon estimates of pass-through of tariffs imposed by Canada on its imports would be incomplete. The United States has imposed a massive tariff shock upon its own imports and tightly integrated North American supply chains may feed spillover effects into Canada. By contrast, any evidence of dumping by other countries into Canada to seek some relief from U.S. tariffs may be offsetting by an uncertain amount.

In short, it's next to impossible to estimate a tariff effect on Tuesday's CPI data, or the next month's data, and very possibly further out than that. Data and the passage of time will guide the matter and the BoC should be very careful, especially given renewed volatility in U.S. trade policy, according to Scotiabank.

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