Canada’s annual inflation rate rose to 2.4 percent in December compared to the same period the previous year, as per Statistics Canada’s report on Monday. The increase was attributed to the expiration of a temporary tax cut that was in effect for two months starting in December 2024. Despite a slight decline in gas prices, inflation, excluding energy, climbed to three percent in December, up from 2.6 percent in November.
The Bank of Canada closely monitors core inflation indicators, which exclude volatile elements like gas prices. In December, two of these core measures decreased. BMO chief economist Douglas Porter noted that most inflation measures are now hovering around 2.5 percent, aligning with the Bank of Canada’s inflation outlook.
Transportation prices saw a notable increase in December, with travel tour prices dropping by 3.2 percent compared to the previous year, and air transportation prices decreasing by 0.8 percent. Grocery prices remained steady month-over-month but surged by five percent year-over-year, driven by increases in coffee and fresh or frozen beef prices.
Statistics Canada’s annual review of consumer prices for 2025 revealed a 2.1 percent rise in inflation on an annual average basis, marking the smallest increase since 2020. Prices for services grew by 3.1 percent, led by slower growth in mortgage interest costs, while shelter prices saw a general slowdown. Goods prices increased at a higher rate compared to the previous year, with passenger vehicle prices contributing to the growth in durable goods prices.
Grocery prices, particularly for coffee, cocoa beans, and sweets, experienced a faster increase in 2025 due to various factors such as weather-related changes in growing regions and U.S. tariffs on producing countries. Meat prices, including fresh and frozen beef, rose by 5.8 percent, influenced by low North American cattle inventories. Prices for dining out increased by 2.6 percent in 2025, slightly lower than the rate in 2024.