02:23 PM EDT, 05/17/2024 (MT Newswires) -- A sharp rise in gasoline prices will be key in driving a 0.5% NSA (0.2% SA) increase in headline CPI during April, according to CIBC's Andrew Grantham. However, with pump prices increasing by a similar amount a year ago, that move should have little impact on the annual rate of inflation, he said. Instead, he added, a continued easing in food price inflation, with monthly increases much more muted than they were throughout most of 2023, should see the year-over-year pace of headline CPI ease to 2.7%, from 2.9% in March.

Grantham noted the levelling off in food prices also appears to have played a large role in bringing weaker monthly changes in the Bank of Canada's trim and median measures of core inflation. He said that should be the case again in April, seeing the year-over-year rates of those measures ease further and keeping the 3 and 6-month annualized trends much more subdued than they were last year.

On forecast implications, Grantham said while headline inflation remains above target, a continuation of the recent soft trend in core measures should provide BoC the "comfort it needs" to gradually start reducing interest rates as early as in June.

Price: 67.12, Change: +0.50, Percent Change: +0.75