Canada’s yearly inflation rate rose to 2.4% in December compared to the same month a year ago, as reported by Statistics Canada on Monday. The increase was influenced by the end of a temporary GST break that started on Dec. 14, 2024, lasting for two months. This change caused a spike in price growth, pushing inflation slightly higher than the 2.2% rate recorded in November. Gas prices saw a decline, but excluding energy, inflation reached 3% in December, up from 2.6% in November.
The Bank of Canada closely monitors core inflation indicators, which exclude volatile elements like gas prices and tax-related adjustments. In December, two of these core measures decreased. BMO chief economist Douglas Porter noted that most inflation measures are now around 2.5%, aligning with the Bank of Canada’s outlook on underlying inflation trends.
In December, travel tour prices dropped by 3.2% year-over-year, while air transportation prices fell by 0.8%. Transportation prices, which usually rise during the holiday season, surged by 34.5% compared to November. Grocery prices remained steady between November and December but increased by 5% compared to the previous year, driven by higher prices for coffee and fresh or frozen beef.
Statistics Canada’s annual review for 2025 revealed a 2.1% rise in inflation on an annual average basis, lower than the 2.4% increase in 2024. Despite this, prices have climbed by 19.9% over the past five years. Excluding energy, prices increased by 2.6% in 2025, remaining consistent with the previous year.
The growth rate of services prices slowed to 3.1% in 2025, mainly due to reduced growth in mortgage interest costs following key interest rate cuts by the Bank of Canada. Shelter prices, including rent, also experienced slower growth. Conversely, goods prices rose at a higher rate in 2025, driven by increased prices for passenger vehicles.
Grocery prices surged by 3.5% in 2025, up from 2.2% in 2024, with higher prices for coffee, cocoa beans, and sweets being major contributors. Weather-related changes in growing regions affected coffee and cocoa beans prices, while U.S. tariffs impacted refined coffee and sweets. Meat prices rose by 5.8%, particularly fresh and frozen beef, as North American cattle inventories hit historic lows. Eating out at restaurants became 2.6% more expensive in 2025, slightly lower than the 3.6% increase in 2024.
