Canada’s yearly inflation rate rose to 2.4 percent in December compared to the same period in the previous year when the government introduced a temporary GST reduction. The reduction, which began on December 14, 2024, lasted for two months and had an impact on inflation data until the end of 2025, influencing a surge in price growth. December’s rate slightly exceeded the 2.2 percent seen in November, with gas prices experiencing a year-over-year decrease. Excluding energy costs, inflation climbed to three percent in December, following a 2.6 percent rise in November.
The Bank of Canada closely monitors core inflation indicators, which eliminate volatile components like fuel prices and tax adjustments. Two of these indicators decreased in December, aligning closely with the Bank of Canada’s outlook on underlying inflation trends. Travel tour prices dropped by 3.2 percent in December compared to the previous year, while air transportation costs decreased by 0.8 percent. Despite the usual rise in transportation prices during the holiday season, the rate surged by 34.5 percent in December compared to November, surpassing previous year-end increases.
Grocery prices remained stable from November to December but increased by five percent compared to the same period the previous year, driven by elevations in coffee and fresh or frozen beef prices. Notably, service prices expanded by 3.1 percent in 2025, a decline from the 4.1 percent growth in 2024, mainly influenced by reduced growth in mortgage interest expenses following the Bank of Canada’s interest rate adjustments. Conversely, goods prices escalated at a higher rate in 2025. Durable goods, particularly passenger vehicles, contributed to this rise. Meat prices surged by 5.8 percent, with fresh and frozen beef prices soaring by 13.5 percent due to decreasing North American cattle stocks. Restaurant dining costs increased by 2.6 percent in 2025, slightly lower than the 3.6 percent increase in 2024.
