Leading Canadian stocks are trending higher on news that the country’s inflation rate has fallen below the central bank’s 2% annualized target.
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Canada’s Consumer Price Index (CPI) came in at an annualized rate of 1.7% in May, lower than had been expected among economists. Excluding volatile energy prices, inflation in May rose 2.7% from a year earlier, following a 2.9% annualized increase in April.
At 1.7%, inflation in Canada is now below the Bank of Canada’s 2% annualized target. That inflation has declined despite tit-for-tat import tariffs against the U.S. and rising geopolitical instability surprised analysts, economists, and markets, sending equities higher in Toronto trading.
The benchmark Toronto Stock Exchange is up about 1% on news of the latest inflation reading. Top Canadian stocks such as Shopify (SHOP), Constellation Software (CSU), and Canada Goose (GOOS) are each higher in early trading on June 24.
Lower Energy Prices
The inflation decline in Canada is mainly attributable to lower energy prices, particularly for gasoline sold at the pumps. Gas prices across the country fell 15.5% year-over-year in May after declining 18.1% in April. Gasoline prices in Canada have been impacted by the removal of a consumer carbon levy that had effectively added an additional tax for consumers at retail gas stations.
Also pushing inflation lower were prices for travel tours that decreased 0.2% in May after rising 6.7% the previous month. Prices for air travel declined 10.1% on an annual basis in May. Also declining in May were prices for cellular service, which fell 5.5% from a year earlier.
Is GOOS Stock a Buy?
The stock of Canada Goose has a consensus Moderate Sell rating among nine Wall Street analysts. That rating is based on five Hold and four Sell recommendations issued in the last three months. The average GOOS price target of $11.08 implies 2.38% downside risk from current levels.
