RE:Inflation Dropping like a rock in Canada 3 month annualized inflation in Canada still running at ~ 5%
Ill be writing up a report soon on Canada versus US inflation.
The US shelter inflation should be coming down significantly in the coming months in the US because of the lagging effect on how the Bureau of Labour Statistics calculates this measure.
In Canada, this should be escalating because Canada uses mortgage interest expense as a measure for shelter inflation. Canada does not use Owners Equivalent Rent ratio either which is part of the shelter inflation calculation south of the border. Also, Canada does not have 15 and 30 year fixed mortgages which implies that we are more interest rate sensitive to Policy rate changes by the Bank of Canada.
Canada and the US have benefitted from significant lower energy prices from a year ago. If you remove the energy component and focus on median Cpi or Cpi trimmed measure, then Canada's inflation is still stubbornly high at around 4.6% and 4.4% respectively. If energy prices begin to trend the other way, then inflation could easily get over 5% once again. In addition, housing costs are only going to rise as more and more Canadians renew their mortgages.
A recession is the only way to bring inflation back to a 2% target.