Canada’s annual inflation rate rose to 2.4% in December, up from 2.2% in November, according to data released Monday by Statistics Canada.Economists had expected inflation to remain unchanged from the previous month, based on consensus estimates published by BMO.Statistics Canada said the increase was influenced in part by the federal GST/HST holiday introduced in December 2024, which temporarily lowered prices last year and affected year-over-year comparisons..Despite the higher headline figure, some economists pointed to easing underlying price pressures. In a note to clients, CIBC economist Andrew Grantham said an average of several core inflation measures showed deceleration compared to November on a monthly, three-month average and annual basis.“Because of that, and despite a somewhat stronger than expected headline reading, today’s data are still consistent with underlying inflation being close to 2%, and as a result we continue to see no change in the Bank of Canada overnight rate throughout 2026,” Grantham wrote.TD economist Leslie Preston expressed a similar view, noting the Bank of Canada’s official core inflation measures, CPI-median and CPI-trim, both cooled further in December..“Looking at trends over the past three months, trim and median inflation were running at only 1.5% and 1.9% on an annualized basis, now below the Bank of Canada’s 2% target,” Preston said.Lower gasoline prices continued to exert the largest downward pressure on inflation. Gas prices fell 7.1% from November and were down 13.8% compared to December 2024. Excluding gasoline, the consumer price index rose 3% from a year earlier.Statistics Canada attributed the decline in fuel prices to falling crude oil prices, which it said have reached their lowest level in more than four years amid global oversupply and other factors..Food-related costs rose more sharply. Restaurant prices increased 8.5% year over year, reflecting the absence of the GST/HST holiday. Prices for food purchased from stores rose 5%, with notable increases in coffee and beef.Other categories affected by the end of the tax holiday included alcoholic beverages, toys, games and hobby supplies, children’s clothing and selected grocery items such as potato chips and candy.On a monthly basis, the consumer price index fell 0.2% in December. On a seasonally adjusted basis, CPI rose 0.3%.
