Canada: Mixed economic data – TDS

TD Securities analysts note that the Canada’s February CPI and retail sales for January were mixed, as a modest upside surprise on CPI was overshadowed by another pullback in retail sales, feeding into the narrative consumer-led led slowdown.

Key Quotes

“The combination of further weakness in retail sales alongside weaker core inflation strengthen our conviction that the Bank of Canada is done with rate hikes this cycle.”

“Retail sales fell by 0.3% m/m in January (TD/market: 0.4%) for the third consecutive decline and fifth in the last six months, which accompanied downward revisions to December (-0.3% from -0.1%).”

“A small upside was realized in February CPI (0.7% m/m, 1.5% y/y), matching our forecast. But as we had flagged, core inflation slipped on average to 1.83% from 1.87%, lending an overall downbeat tone to the report.”