Canada’s annual inflation rate rose to 2.4 percent in December compared to the same period last year, as reported by Statistics Canada on Monday. This increase was influenced by the end of a temporary tax cut that had been in effect for two months starting on December 14, 2024. Gas prices saw a decline year-over-year, but excluding energy, inflation climbed to three percent in December, up from 2.6 percent in November.
The Bank of Canada monitors core inflation measures, which exclude volatile elements like gas prices and tax-related changes. Two of these measures decreased in December, bringing most inflation metrics close to the Bank of Canada’s target of 2.5 percent.
In December, prices for travel tours dropped by 3.2 percent year-over-year, while air transportation prices fell by 0.8 percent. Transportation prices surged by 34.5 percent from November to December, exceeding previous December increases. Grocery prices remained steady from November to December but increased by five percent compared to the previous year, driven by higher prices for coffee and fresh or frozen beef.
Statistics Canada’s annual review of consumer prices for 2025 revealed a 2.1 percent increase in inflation on an annual average basis, down from 2.4 percent in 2024. Services prices rose by 3.1 percent, led by slower growth in mortgage interest costs due to rate cuts by the Bank of Canada. Meanwhile, goods prices grew at a higher rate in 2025, with passenger vehicle prices contributing to the increase.
Grocery prices grew by 3.5 percent in 2025, with coffee, cocoa beans, and sweets experiencing higher prices. Weather-related changes in growing regions impacted coffee and cocoa beans, while U.S. tariffs affected refined coffee and sweets prices. Meat prices increased by 5.8 percent, notably fresh and frozen beef, as North American cattle inventories decreased. Restaurant prices rose by 2.6 percent in 2025, slightly lower than the previous year’s increase.