02:00 PM EST, 02/14/2025 (MT Newswires) -- Over at CIBC, Andrew Grantham noted the GST holiday will continue to impact headline CPI data in January, as that marked the only full month the holiday will be in effect. As such CIBC expects to see some further weakness in food prices, and declines for children's clothing and toys. Grantham said the flat reading that CIBC forecasts for the headline unadjusted change in prices during January would likely have been a 0.4% increase were it not for the GST impact. Gasoline prices were up on the month and likely one of the main causes of inflationary pressure, he added.

Grantham noted the Bank of Canada's Trim and Median gauges of inflation, as well as the old CPI-X, exclude the impact of indirect taxation such as GST and as a result shouldn't be as volatile as the headline measure. Actually, he said, it is possible that if the GST reduction wasn't passed on fully to consumers, trim, median and CPI-X may be printing stronger monthly readings than they otherwise would have. CIBC forecasts a slight acceleration in both trim and median on a year-over-year basis, mainly due to base effects.

On forecast implications, Grantham noted all measures of inflation are within the BoC's 1-3% bound at the moment, with some a little below and some a bit above the midpoint. This means policymakers can, for now at least, focus more on tariff uncertainty and the downside risks to GDP growth rather than the monthly wiggles in inflation, he said.

Price: 88.26, Change: +0.21, Percent Change: +0.24