CANADA: June CPI: Analysts Mixed On Food, Eye Continued Shelter Softening (3/3)

Selected sell-side analysts commentary in alphabetical order of institution, along with their estimate for June CPI readings:

• BofA (headline 2.0% Y/Y): "We expect upside pressure from transportation inflation."
• CIBC (headline 1.8% Y/Y, trim/median avg 3.0%): "While we’re below consensus on headline inflation, we see another 0.3% increase in seasonally adjusted ex-food/energy prices, and therefore not enough progress on the Bank’s core measures to tip the scales towards a July rate cut after the better jobs data for June. ... we look for some softness in domestically-driven services prices, including rent, that make the case that the inflation we’re seeing now will fade as we move past the one-off impacts from trade policies.... We anticipate a slowdown in the shelter index, particularly in rental rates that haven’t yet picked up drops being observed across major cities for vacant units, and service categories tied to the slack in the labour market. That would partly offset the further upside to goods prices from tariffs, particularly within food and auto categories.... Moreover, the strengthening in the Canadian dollar since March will help to offset tariff impacts."
• National (headline 1.9% Y/Y, trim/median avg 2.95%): "Gasoline prices fell during the month, which may have limited headline price growth to 0.1% m/m."
• RBC (headline 1.9%): "There have been signs of tariffs raising prices for some Canadian food products, and vehicle prices have been climbing steadily since March. But, the broader impact of tariffs on prices has been limited. Canadian retaliatory tariffs announced earlier this year were measured and targeted, and in many cases, have been paused to avoid raising costs for Canadian consumers and producers.... Food price inflation—which picked up earlier this year due to higher costs for groceries potentially related to Canadian retaliatory tariffs on imports from the U.S. and dining out—eased slightly in May on an annual basis. We expect this softening to persist in June... Gasoline prices edged down 0.9% from May despite a 10% jump in oil prices due to conflict in the Middle East, and were still more than 10% lower from a year ago, reflecting the removal of the consumer carbon tax in April."
• Scotiabank (headline 2.0% Y/Y): "June is normally a seasonal up-month for prices and I’ve gone with a conservative estimate of seasonal influences. Gasoline prices shouldn’t be a material effect this time. The same goes for food. Shelter may be an upside risk as it was weighed down in April and May by the pass through of the elimination of the consumer portion of the carbon tax and provincial measures into home energy costs. Also monitor potential upside risk from travel related categories such as airfare...It remains far too warm for the BoC to be contemplating easing as inflation risk has yet to have been licked into forward-looking risks to supply chains. What will also matter will be evidence on the breadth of price increases which has been on the rise."
• TD (headline 1.8% Y/Y, trim/median avg 2.95%): "Higher food prices will a mild tailwind on a m/m basis, offsetting a modest drag from energy products, as a smaller drag from energy provides the main driver for the acceleration year-over-year. The June CPI report should also bring more deceleration across the food and
  shelter components, and more evidence of stabilization in core inflation measures....Elsewhere, shelter prices should see further deceleration in June as rental markets continue to soften, with lease rates for a new apartment contracting for the 9th consecutive month. The ongoing moderation in mortgage interest costs will provide another driver, with MIC deceleration shaving ~6bps/month from headline CPI over 2025, along with a pullback in homeowner replacement costs and other owned accommodation. We look for a larger contribution from core goods to offset the deceleration in shelter, even with some stabilization -for output prices in recent business surveys, while seasonal tailwinds to travel-related components will provide a source of strength for non-shelter services."