BMO on The Day, Week Ahead in Canada

07:30 AM EDT, 05/19/2026 (MT Newswires) -- Canada will publish the consumer price index for April at 8:30 a.m. ET on Tuesday, said Bank of Montreal (BMO).

Energy prices continued to climb in April, building on the prior month's surge, amid ongoing transportation disruptions due to the war in Iran, noted the bank. The federal government's five-month gasoline excise tax holiday provided little reprieve, although it only started on April 20.

April is a seasonally strong month for Canadian CPI anyway, rising 0.5% month over month or more not seasonally adjusted in four of the past five years, pointed out BMO. Indeed, beyond energy, household operations/furnishings and health/personal care tend to see strong gains in the month as well.

There's also potential upside risk to airfares as airlines pass along higher fuel costs. One sector that's pulling the other way is housing, restrained by falling interest costs and new home prices. The bank's call for a 0.6% month-over-month rise would lift the yearly rate to 3.1%, the fastest pace since late 2023.

Core inflation -- CPI Trim & Median -- is expected to be flat to down a tick, due to favorable base effects, stated BMO. A soft underlying economy has put downward pressure on domestic prices, driving a decelerating trend in core CPI metrics.

Unfortunately, the improvement in the short-term metrics looks to stall. Other core measures are expected to decelerate in April, with CPIX easing to 2.3% year over year and CPI excluding food and energy slowing to +1.7% year over year -- which would be a five-year low.

BMO will be watching how inflation breadth evolves, as that's a key focus for the Bank of Canada amid concerns about potential pass-through from energy prices.

Investors will also get a pulse-check on the Canadian consumer on Friday, added the bank. While BMO estimates retail sales increased in March -- its call of 0.5% month-over-month gain is a tenth softer than Statistics Canada's flash estimate -- the bank suspects the strength was largely driven by higher gasoline prices.

Auto sales were a touch softer in the month, so sales excluding autos look to rise 1.0% month over month, accoridng to BMO. Still, non-discretionary spending could take a hit as more household budgets are allocated to essentials like gasoline and home heating.

Highlighting that point, the bank wouldn't be surprised to see an outright decline in spending volumes. The April flash estimate will provide a clue to the direction of spending beyond the immediate outbreak of the Iran war.

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