Canada, UK And New Zealand CPI Inflation Reports In The Spotlight

Inflation reports coming from Canada, New Zealand and the UK as well as the European Central Bank (ECB) interest rate decision will be the main financial data releases expected this week.

In the UK, the unemployment rate fell to 4% in the June to August quarter while average earnings (excluding bonuses) rose by 4.9% in June-August, down from 5.1% in May-July. Analysts at the National Institute of Economic And Social Research (NIESR) told The Guardian that “this is positive news for inflation and might provide the Bank of England with increased confidence regarding interest rate cuts.”

Canada CPI To Drop Under BoC Target In September?

Later today, the Bank of Canada (BoC) and Statistics Canada are expected to release their September CPI inflation reports. Market analysts forecast headline inflation to drop to 1.8% on a year-to-year basis. The BoC’s inflation target remains at 2%. In the last few days, some reports have indicated that the BoC may lower its interest rates sooner than the Federal Reserve trying to boost the country’s weak economic growth.

RBC economists noted in a report released on October 15th that “year-over-year headline CPI is expected to have eased to 1.8% in September from 2% in August, while the sub-index that strips out more volatile food and energy components held steady at 2.4%. Bank of Canada’s preferred core inflation measures (CPI trim, median and ‘supercore’) are expected to on balance have dropped lower on a three-month annualized basis. This signals price pressures continued to unwind in line with a very weak near-term outlook for the economy.“

New Zealand Q3 2024 CPI Report

On Wednesday morning, analysts will have the opportunity to scrutinise New Zealand’s CPI inflation report for the third quarter of the year. Economists expect the report to show that inflation fell to 2.3% on an annualised basis from 3.3% in the second quarter. On a quarterly basis, however, analysts forecast a 0.7% rise from 0.3% in the previous quarter.

A Westpac report said: “We estimate that New Zealand consumer prices rose by 0.7% in the September quarter. That would see annual inflation dropping to 2.2% – the first time it’s been below 3% since 2021. Adding to inflation in the September quarter are large increases in local council rates, insurance premiums and food prices. Those increases are balanced against lower prices for fuel and imported durable items. Our forecast is slightly below the RBNZ’s forecast from their August Monetary Policy Statement, reflecting weaker fuel prices in recent months as the oil price has fallen.”

Analysts Expect UK CPI Inflation To Have Fallen In September

Later on Wednesday, the Office for National Statistics (ONS) will publish its September CPI inflation report which some analysts forecast to show the headline figure dropping to 1.9%, lower than the BoE’s target. Core CPI inflation is also expected to have retreated to 3.4%.

After its monetary policy meeting on September 19th, the UK central bank’s policymakers noted that “monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further.” The BoE’s projections suggest that headline inflation could stay above its 2% target throughout 2025 before falling below target in 2026.

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