Canada recorded a decrease in its annual inflation rate, dropping to 2.3% in January, as reported by Statistics Canada. This decline was primarily driven by a decrease in gasoline prices. Economists had anticipated the rate to remain steady at 2.4% from the previous month.
The drop in pump prices significantly impacted the overall inflation rate, with gasoline prices falling by 16.7% in January compared to the same period last year. Excluding gas prices, the inflation rate for January stood at three percent.
The core inflation measures preferred by the Bank of Canada, which exclude volatile factors like one-time tax adjustments and gas prices, all decreased in January. This brought the rates closer to the central bank’s target of two percent inflation.
Chief economist at Bank of Montreal, Douglas Porter, expressed optimism about the inflation nearing the target. However, he highlighted that the central bank has set a high bar for further interest rate cuts and emphasized that monetary policy cannot address supply-related shocks.
Grocery inflation slightly decreased to 4.8% in January compared to the previous year, following a rise to five percent in December. Lower prices for fresh fruit, particularly berries, oranges, and melons, contributed to the slowing price growth.
Housing price growth has been on a downward trend since early 2024, according to Statistics Canada. In January 2026, the growth rate dipped to 1.7%, marking the first time in five years that it fell below two percent. Rent prices decelerated notably in Prince Edward Island and Saskatchewan. Additionally, cell service prices moderated to 4.9% on a yearly basis in January, down from December’s 14.6% rate.
