December Inflation Rate Ticks Higher

Canada’s headline inflation rate came in higher than expected in December, as Statistics Canada reported the Consumer Price Index (CPI) rose 2.4% year over year, up from 2.2% in November. 

A poll of economists ahead of Monday’s release had forecast inflation would hold steady at 2.2%. Instead, StatCan said the acceleration was largely the result of a temporary federal tax measure falling out of the annual comparison. 

In mid-December 2024, Ottawa removed GST and HST from a range of items including restaurant, meals, alcohol and children’s toys, pushing prices lower. With those discounted prices no longer included in the year-over-year calculation, headline inflation saw upward pressure to end 2025. 

Moderating the increase in headline inflation was a sharp decline in gasoline prices. On a year-over-year basis, prices for gasoline fell 13.8% in December after a 7.8% decline in November, StatsCan said. The agency attributed the latest decline to crude oil prices falling to their lowest levels in more than four years, driven in part by ongoing oversupply in global oil markets. 

Food prices continued to be a major pressure point for consumers. While grocery prices were unchanged on a month-to-month basis, food purchased from stores rose 5% year over year in December Coffee prices surged 30.8%, while fresh or frozen beef prices climbed 16.8%, making them among the largest contributors to food inflation, StatsCan said.