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Canada CPI set ahead of Aug. 19 U.S. Section 338 tariffs

Ahead of the Aug. 19 tariff deadline, analysts expect Canada’s headline CPI growth to rise to 2.9% year over year in July, with energy cited as the main driver.

Reported · Written up by our desk · Central Banks

Canada’s July Consumer Price Index is due Monday, with forecasts calling for headline CPI year over year to tick up to 2.9% from 2.8% in June, driven by a reacceleration in energy prices, Action Forex reports. The outlet expects gasoline to average about 25% higher than a year earlier in July, and it anticipates that pass-through from energy to broader consumer prices will remain limited.

Action Forex also points to relatively stable “core” inflation dynamics, saying prices excluding food and energy are expected to edge up to 1.9% from 1.8% in June. It further expects the Bank of Canada’s preferred measures, the median and trim, to hold around similar rates, with food price growth still above 3%.

The market focus is also on trade, with Action Forex noting that U.S. Section 338 tariffs targeting about 5% of Canada’s exports are set to take effect August 19. The outlet says the tariff deadline has fast-tracked U.S.-Canada trade talks, but it expects low odds of resolving all trade irritants before Wednesday.

For the U.S., Action Forex estimates the targeted products amount to a small, highly substitutable share of imports, while Canada faces a bigger but still manageable hit, including an estimated effect of 0.4% of Canada’s gross domestic product and jobs. It adds that, even with the tariffs, 80% of Canada’s exports to the U.S. remain duty free under CUSMA exemptions.

Latest closeGasoline (RBOB) $2.901 ▼7.3%

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