Canada’s yearly inflation rate rose to 2.4 percent in December compared to the same period the previous year due to the cessation of a temporary tax cut that had impacted prices. The rate in December was slightly higher than November’s 2.2 percent, with gas prices decreasing year-over-year. Excluding energy, inflation climbed to three percent in December, up from November’s 2.6 percent. The Bank of Canada monitors core inflation measures, which exclude volatile elements such as gas prices or tax-related changes. Two of these core measures decreased in December.
The price of travel tours dropped by 3.2 percent in December compared to the previous year, while air transportation prices fell by 0.8 percent. Despite the usual rise in transportation prices during the holidays, there was a significant 34.5 percent increase in December compared to November. Grocery prices remained stable between November and December but saw a five percent increase compared to the previous year, driven by higher prices of coffee and fresh or frozen beef.
Statistics Canada’s annual review of consumer prices for 2025 revealed that inflation averaged 2.1 percent for the year, a slight decrease from the 2.4 percent in 2024. Excluding energy, prices increased by 2.6 percent in 2025, consistent with the previous year. Service prices grew by 3.1 percent, mainly due to slower growth in mortgage interest costs following cuts to the key interest rate by the Bank of Canada. Goods prices rose at a higher rate in 2025 compared to the previous year, with passenger vehicles and grocery items, such as coffee and sweets, driving the increase.
Factors such as weather-related changes in growing regions, U.S. tariffs on producing countries, and low North American cattle inventories contributed to price increases in coffee, cocoa beans, and meat products. Additionally, prices for eating out at restaurants increased by 2.6 percent in 2025. Despite the rise in inflation, BMO chief economist Douglas Porter noted that there were no indications for the Bank of Canada to consider further policy easing at this time.