Canada’s yearly inflation rate rose to 2.4 percent in December compared to the same period the previous year, as per Statistics Canada’s latest report. This increase followed the conclusion of a temporary tax cut that had been in effect since December 14, 2024. The inflation rate for December was slightly higher than November’s 2.2 percent, with the exclusion of energy leading to a three percent rise in December. The Bank of Canada focuses on core inflation measures, which saw a decline in two of those measures in December.
Travel tour prices dropped by 3.2 percent in December year-over-year, while air transportation costs decreased by 0.8 percent. Despite the usual rise in transportation prices during the holiday season, there was a notable 34.5 percent increase in December compared to November. Grocery prices remained stable between November and December but surged by five percent compared to the same period last year, driven by increases in coffee and fresh or frozen beef prices.
In the larger context, the annual average inflation rate for 2025 was reported at 2.1 percent, lower than the 2.4 percent increase in 2024. This marks the smallest annual average rise since 2020, even though prices have climbed by 19.9 percent over the last five years. Excluding energy, prices increased by 2.6 percent in 2025, matching the previous year’s rate.
Service prices grew by 3.1 percent in 2025, down from 4.1 percent in 2024, mainly influenced by reduced growth in mortgage interest costs due to cuts in the Bank of Canada’s key interest rate. Shelter prices, including rent, also exhibited slower growth. Goods prices, on the other hand, rose at a higher rate in 2025, with passenger vehicle prices contributing to the growth in durable goods. Grocery prices accelerated to a 3.5 percent growth rate in 2025, compared to 2.2 percent in 2024, primarily due to increased prices for coffee, cocoa beans, and sweets.
Factors such as weather-related changes in growing regions impacting coffee and cocoa beans, as well as U.S. tariffs affecting refined coffee and sweets, played a role in the price hikes. Meat prices surged by 5.8 percent, notably fresh and frozen beef by 13.5 percent, as North American cattle inventories hit historic lows. Fresh fruit prices, particularly oranges, also experienced an uptick. Restaurant dining costs increased by 2.6 percent in 2025, slightly lower than the 3.6 percent rate in 2024.
