Canadian annual inflation rate edges down in January as gasoline costs drop

A person shops in a grocery store in Toronto, Ontario, Canada, January 26, 2026. REUTERS/Carlos Osorio · Reuters

Reuters

Tue, February 17, 2026 at 10:39 p.m. GMT+9 2 min read

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OTTAWA, Feb 17 (Reuters) - Canada’s annual inflation rate in January accelerated at a slower pace than the previous month as a big drop in gasoline prices ‌helped cushion the impact of higher food and clothing prices, Statistics Canada said on ‌Tuesday.

The consumer price index rose 2.3% in January compared with 2.4% in December, beating an analysts’ poll which pegged the ​January’s expected rise in consumer prices at 2.4%.

On a monthly basis, the CPI was unchanged from the prior month, data showed.

The gasoline price index was the largest contributor to the deceleration in headline inflation, StatsCan said, as the yearly decline in gasoline prices have been huge.

Prices at petrol ‌pumps fell on an average 16.7% ⁠in January, after a decline of 13.8% in December. But, excluding gasoline, the CPI rose 3% in January, matching the increase in December, the ⁠statistics agency said.

A sales tax break during the same period last year created an opposite base effect for some products such as food, alcohol and clothing. This pushed up the prices last month when ​compared ​with the same period a year ago.

Food prices rose ​7.3%, largely based on food from ‌restaurants, and the category containing primarily alcoholic beverages rose 4.8% in January.

Due to the choppy impacts of sales tax break, economists usually focus on core inflation to ascertain actual rise in consumer prices.

Excluding food and energy, the CPI rose 2.4% year over year in January, following a 2.5% increase in December, the agency said.

The Bank of Canada’s preferred core measures of inflation ‌continued to ease.

CPI-median, or the price change of centermost ​component of the CPI basket when arranged in order ​of increasing prices, was 2.5% compared ​with 2.6% previously, while CPI-trim, which excludes the most extreme price changes, ‌was 2.4%, down from 2.7% in December, ​StatsCan said.

Shelter costs, which account for ​the biggest weight in the CPI basket, continued to rise at a slower pace and rose 1.7% last month from a year earlier.

The January data come as the ​Bank of Canada has indicated ‌that it considers inflation to be stable and around the mid-point of its ​target range. This has helped the central bank to pause rate cuts at ​2.25%.

(Reporting by Promit Mukherjee; Editing by Dale Smith)

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