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USD/CAD
Canada December CPI 2.4% y/y vs 2.2% expected
Key Takeaways (30s Read)
Canada's December CPI came in at 2.4%, higher than the expected 2.2%, raising rate hike odds.
Canada's December CPI rose to 2.4% year-on-year, surpassing the expected 2.2% and increasing the chances of a rate hike by the Bank of Canada. Year-over-year, rising restaurant prices were the main contributor to this increase, with grocery prices also up 5.0% y/y. This contrasts with November's slight monthly increase of 0.1%. The core CPI remained steady at 2.8%, while monthly core inflation fell by 0.4%, slightly below expectations. The USD/CAD pair dipped around 8 pips following the report. While inflation has stabilized since peaking at 8.1% in June 2022, essential costs like groceries and housing remain stubbornly high entering 2026, suggesting closer scrutiny on the BOC's future rate decisions.
AI Analyst
AI Opinion
"The December CPI reading in Canada exceeding expectations is likely to influence interest rate hike expectations, prompting market reactions. The increases in essential costs like groceries and dining highlight continued inflation pressures that concern consumers. The sharp rise in food prices, in particular, could influence consumer sentiment, making the outlook for future spending uncertain. Given these factors, investors should closely watch the movements in USD/CAD and consider position adjustments based on forthcoming decisions from the Bank of Canada."
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