TD Securities strategists expect Canada’s May Consumer Price Index (CPI) to rise, with headline inflation projected at 3.1% year-on-year and 0.8% month-on-month, driven by higher energy prices and seasonal factors. Core goods and travel-related components are seen providing additional support, while CPI-trim and CPI-median are forecast to hold steady, keeping core inflation broadly aligned with Bank of Canada projections.

Headline and core inflation expectations

“We look for headline CPI to firm by 0.3pp to 3.1% y/y in May as prices rise 0.8% m/m (market: 3.0%, 0.7%), fueled by another large increase for energy products and seasonal tailwinds.”

“Core goods should see a modest acceleration from April, while a partial rebound in travel-related components provides another driver for the headline print.”

“Core inflation measures should stabilize in this report with CPI-trim/median forecast to hold at 2.0%/2.1% after slowing 0.4pp over the last three months.”

“That would still leave core CPI tracking in line with BoC projections from the April MPR despite a higher trajectory for energy prices.”

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