Canadian Inflation - January 2026

Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.3 per cent on a year-over-year basis in January, following the 2.4 per cent increase in December. On a seasonally adjusted monthly basis, the CPI was up 0.1 per cent in January, equivalent to a 0.7 per cent increase on an annualized basis. The CPI ex-gasoline increased by 3.0 per cent in January, matching the previous month. Additionally, food prices increased by 7.3 per cent year-over-year, driven by base-year effects from last year’s GST holiday break on restaurant meals. In BC, consumer prices rose 2.0 per cent year-over-year in January, up 0.3 points from December. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, fell to 2.5 and 2.4 per cent year-over-year, respectively. 
 
Sharper falls in gasoline prices partially counteracted upward pressure on many sub-aggregates that were affected by last year’s GST holiday, leaving headline inflation in a fairly similar place compared to December. However, 3-month annualized core inflation cooled further to about 1.2 per cent, levels not seen since the early pandemic era. Looking ahead, we expect the Bank of Canada to remain on hold in 2026, but next week’s GDP release should provide an early indication of the direction of the Canadian economy this year.