Scotiabank Says Monday's CPI in Canada Is Backward Reading

08:12 AM EDT, 03/16/2026 (MT Newswires) -- Canada refreshes the consumer price index for February at 8:30 a.m. ET on Monday as the last major reading before Wednesday's Bank of Canada decision, said Scotiabank.

The relevance of the release is likely to be pretty minimal given fresher inflation risks emanating from the war with Iran, noted the bank.

CPI is expected to be up 0.9% month over month seasonally unadjusted as per the polling convention, with consensus at 0.7%, leading to the year-over-year rate ebbing a touch to 2.1% versus 2.3% prior and 1.9% consensus, stated Scotiabank. The year-over-year rate will be distorted lower by the mid-February 2025 expiration of the temporary GST tax cut.

Two things are what really matter, according to the bank. One is what happens to the three main core inflation readings, given a weakening trend over the past three months.

The BoC won't overreact to this recent trend a) because investors have seen multiple head fakes before reacceleration over the pandemic era, b) because some of that reflects the lagging effects of softening economic momentum that prompted easing in the first place with such easing still working through the 12-24 month lagging effects on the economy and inflation, and c) because of forward-looking risks.

Secondly, watch the breadth of inflationary pressures given the rising pattern for several months, added Scotiabank.

One driver is that February is normally a strong seasonal up-month for prices in Canada. February's seasonal adjustment factor has been moving higher in recent years, which could also add to the seasonally adjusted reading. Another driver is a mild expected contribution from higher gasoline prices that will become more significant in the next release. There could be a minor weighted lift from food prices as well.

What could also be drivers are rebounds in shelter inflation and services, excluding shelter, given the prior month's decline but somewhat offset by the lower weight on softer core goods inflation after the strongest reading since last spring.

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