Annual CPI rises 3.3% in July vs. 3% expected

• Annual inflation in Canada rebounded to 3.3% in July from 2.8% in June. 
• USD/CAD slides to 1.3470 after the CPI data and US Retail Sales. 

Inflation in Canada, as measured by the change in the Consumer Price Index (CPI), rebounded to 3.3% on a yearly basis in July from 2.8% in June, which was the lowest rate since March 2021. This reading came in above the market expectation of 2.8%. On a monthly basis, the CPI rose 0.6%, compared to analysts’ estimate for an increase of 0.3%.

Moreover, the Bank of Canada reported that the monthly Core CPI, which excludes volatile food and energy prices, rose 0.5%, while the annual Core CPI rate stayed at 3.2%, against expectations of a decline to 2.8%. 

Market reaction

The USD/CAD edged lower following the Canadian CPI and also US Retail Sales data. The pair dropped from 1.3490 to 1.3470, as the positive impact on the Canadian Dollar was being offset by a larger-than-expected increase in US Retail Sales.