The headline inflation rate in Canada rose to 2.4% in December of 2025 from 2.2% in the previous month, the highest in four months, and firmly above market expectations that the rate would remain unchanged. The result contrasted slightly with the Bank of Canada’s expectations that CPI inflation would remain around the 2% threshold in the near-term. A portion of the acceleration was owed base effects from the temporary GST and HST that started in December 2024, triggering higher inflation rates for food purchased from restaurants (8.5% vs 3.3% in November), alcoholic beverages from stores (5.6% vs 3%), and toys, games, and hobby supplies (7.5% vs -0.5%). Meanwhile, inflation eased for shelter (2.1% vs 2.3%) and prices fell for transportation (-0.5% vs 0.7%). Consequently, the median core inflation rate, which is closely monitored by the BoC as a gauge for underlying price growth, slowed to a one-year low of 2.5%.
