Canada Inflation Rate Rises to 7-Month High

The headline inflation rate in Canada fell to 1.8% in February of 2026 from 2.3% in the previous month, slightly under market expectations of 1.9% to reflect the softest rate since July of the previous year. Price growth remained in line with the baseline expectations from the Bank of Canada that inflation would remain near the 2% mark in the near term, although the Bank's outlook and the data preceded the outbreak of war in Iran that triggered a surge in global energy prices, and those of other selected commodities. February's drop reflected base effects from the end of tax breaks in February of 2025, driving food inflation to slow to 5.3% from 7.3% last month. Prices also decelerated for recreation and education (0.5% vs 1% in January), household operations (1.2% vs 2.5%), and shelter (1.5% vs 1.7%), while transportation deflation slowed (-0.8% vs -1.7%). Meanwhile, core rates tracked by the BoC eased more than expected, with the trimmed-mean rate falling to a four-year low of 2.3%.

The headline inflation rate in Canada eased to 2.3% in January of 2026 from the three-month high of 2.4% in the previous period, slightly under market expectations that it would hold at 2.4%. The result was loosely aligned with the Bank of Canada's projection that the inflation rate would be near the 2.5% mark at the start of the year before treading below the 2% target, as base effects from the GST/HST break in January of 2025 continued to impact annual inflation rates. Deflation picked up for transportation (-17% vs -0.5% in December) due to the 16.7% plunge in gasoline prices. Inflation slowed for shelter (1.7% vs 2.1%) and household operations and furnishings (2.5% vs 3.6%). In turn, prices accelerated for food (7.3% vs 6.2%) due to breaks from the tax regimes, especially lifting prices of food from restaurants (12.3%). Meanwhile, the trimmed-mean core rate fell to 2.4% from 2.7%, well under expectations of 2.6%, for the lowest since April 2021.

The headline inflation rate in Canada rose to 2.4% in December of 2025 from 2.2% in the previous month, the highest in three months, and firmly above market expectations that the rate would remain unchanged. The result contrasted slightly with the Bank of Canada's expectations that CPI inflation would remain around the 2% threshold in the near-term. The acceleration reflected base effects from the temporary GST and HST break introduced in December 2024, triggering higher inflation rates for food purchased from restaurants (8.5% vs 3.3% in November), alcoholic beverages from stores (5.6% vs 3%), and toys, games, and hobby supplies (7.5% vs -0.5%). Meanwhile, inflation eased for shelter (2.1% vs 2.3%) and prices fell for transportation (-0.5% vs 0.7%). Consequently, the median core inflation rate, which is closely monitored by the BoC as a gauge for underlying price growth, slowed to a one-year low of 2.5%.