August inflation figures for Canada will be announced on Tuesday. The anticipation of Analysts is that the headline rate will fall to 7.3%, down from 7.6% in July and a four-decade high of 8.1% in June.
However, all eyes will be on the three core inflation metrics – CPI Common, CPI Median, and CPI Trim – which, when combined, are seen to be a stronger reflection of underlying pricing pressures.
In six months, the Bank of Canada has hiked interest rates by 300 basis points to 3.25%, a 14-year high. Most economists believe that any transition to a wage-price spiral will be temporary, especially if the economy slows. “We believe aggressive interest rate rises will be followed by a recession next year,” forecasts one analyst.