Canada’s inflation rate for January decreased to 2.3 percent, as reported by Statistics Canada. This decline was primarily influenced by a drop in gasoline prices, with economists initially anticipating the rate to hold steady at 2.4 percent from December. Gasoline prices fell by 16.7 percent in January compared to the previous year, leading to a three percent inflation rate for January when excluding gas prices.
The core inflation measures preferred by the Bank of Canada, which eliminate volatile factors like one-time tax changes and gas prices, all decreased in January. This brings these rates closer to the central bank’s two percent inflation target. Analysts view this trend positively, with Douglas Porter, chief economist at Bank of Montreal, noting the significance of inflation nearing the two percent target on a broader scale. However, the Bank of Canada has emphasized the high threshold for lowering the key interest rate and highlighted that monetary policy cannot address supply-related shocks.
Food inflation moderated slightly in January, with grocery inflation easing to 4.8 percent from the previous year, following a rise to five percent in December. Lower prices for fresh fruit, particularly berries, oranges, and melons, contributed to the slowdown in price growth. Statistics Canada highlighted that the impact of last year’s GST break, which occurred from December 14, 2024, to February 15, 2025, continues to affect inflation data.
Housing price growth has been on a downward trajectory since early 2024, and this trend persisted in January 2026, with price growth reaching 1.7 percent. It marked the first time in five years that the rate dropped below two percent. Rent prices decelerated notably in Prince Edward Island and Saskatchewan, while the index tracking changes in mortgage interest payments also slowed in January.
Furthermore, cell service prices saw a slowdown in January, registering a 4.9 percent increase year-over-year, compared to the 14.6 percent rate in December. This data reflects the evolving economic landscape and its impact on various sectors of the Canadian economy.