Canada’s yearly inflation rate rose to 2.4% in December compared to the same month the previous year, as per Statistics Canada’s announcement on Monday. The increase was influenced by the ending of a temporary tax cut that had been in effect for two months starting from December 14, 2024. Gas prices saw a decline, but excluding energy from the calculation, inflation reached 3% in December, up from 2.6% in November.
The Bank of Canada monitors core inflation measures, which exclude volatile components like gas prices and tax changes. In December, two of these measures decreased. BMO chief economist Douglas Porter noted that most inflation indicators are now around 2.5%, aligning closely with the Bank of Canada’s inflation outlook.
In December, prices for travel tours dropped by 3.2% year-over-year, while air transportation prices fell by 0.8%. Despite the usual rise in transportation costs during the holidays, prices surged by 34.5% compared to November. Grocery prices remained stable from November to December but increased by 5% from the previous year, with coffee and beef contributing to the rise.
The annual review of consumer prices for 2025 from Statistics Canada revealed a 2.1% increase in inflation on average for the year. Excluding energy, prices rose by 2.6% in 2025, mirroring the previous year. Services prices grew by 3.1%, driven by slower growth in mortgage interest costs, while shelter prices saw a general slowdown. Goods prices escalated in 2025, with higher prices for passenger vehicles and grocery items like coffee and sweets.
Weather-related changes impacted coffee and cocoa bean prices, while U.S. tariffs affected refined coffee and sweets. Meat prices, especially fresh and frozen beef, rose by 5.8%, attributed to low North American cattle inventories. Restaurant dining costs increased by 2.6% in 2025, slightly lower than the previous year.
