National Bank of Canada analysts expect Canada\u2019s January CPI to be unchanged month on month. This could lower headline inflation to 2.3%, with CPI-trim edging down and CPI-median staying at 2.5%.<\/p>\n
They link the flat monthly CPI to only a slight rise in petrol prices. They also expect headline goods expenditure to fall by 0.5%.<\/p>\n
Outside inflation, they foresee December retail sales declining and modest gains in manufacturing. They also expect housing starts to strengthen, while existing home sales weaken in major cities.<\/p>\n
On trade, they expect gold exports to support total exports. They estimate the trade deficit could narrow from C$2.2 billion to C$1.4 billion, with higher imports only partly offsetting the export rise.<\/p>\n
The recent January CPI data confirms the trend we anticipated, with the headline inflation rate cooling to 2.4%. This figure, reported by Statistics Canada last week, was very close to our 2.3% forecast and continues the clear downward path from the highs we saw throughout 2025. This reinforces the view that the Bank of Canada’s policy is achieving its intended effect.<\/p>\n
With inflation nearing the central bank’s 2% target, the market is now pricing in over a 60% chance of a rate cut by the July meeting. We are seeing this reflected in the derivatives market, with increased buying of call options on Government of Canada bond futures. This positioning suggests a growing consensus that the peak in interest rates is firmly behind us.<\/p>\n
This outlook is likely to put downward pressure on the Canadian dollar in the coming weeks. We should consider strategies that benefit from a weaker CAD, especially against the US dollar where rate cut expectations are less certain. Looking back at 2025, the currency weakened each time soft inflation data surprised the market, a pattern that may repeat.<\/p>\n
The economic picture is not uniform, as the forecast for weaker consumer spending was also confirmed. Statistics Canada’s latest release showed that retail sales for December 2025 fell by 0.2%, supporting the view of a cautious consumer heading into the new year. This soft landing scenario, where inflation cools without a severe recession, could be supportive for Canadian equities, making strategies like selling put options on the S&P\/TSX 60 index attractive for collecting premium.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" National Bank expects flat January CPI, easing inflation to 2.3%, amid softer goods, trade improvement.<\/p>\n","protected":false},"author":62,"featured_media":16965,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42003","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42003"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42003\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16965"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}