Statistics Canada says the end of the federal government’s tax holiday a year earlier pushed the national annual pace of inflation up two ticks to 2.4 per cent in December. The rate of inflation in Ottawa in December was 2.6 per cent, up from 2.0 per cent a month earlier.
A poll of economists heading into Monday’s data release had expected the annual inflation rate would hold steady at 2.2 per cent.
StatCan said the federal government’s move to take GST off some items for two months starting mid-December in 2024 dropped prices for dining out, alcohol, children’s toys and more a year earlier, but those discounts fell out of the annual comparison and pushed the consumer price index higher to end the year.
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That led to an 8.5 per cent annual increase in the price of restaurant meals, which StatCan said fueled the acceleration in the headline number. Some grocery items including potato chips and confectionary goods were also included in the tax holiday and saw annual price jumps in December, the agency said.
Overall, the cost of food bought from the grocery store rose five per cent annually, though StatCan said price levels were broadly unchanged month-to-month. Grocery store inflation has been accelerating in recent months, rising 4.7 per cent year-over-year in November.
The agency said the price of coffee was up more than 30 per cent in December, while the cost of fresh or frozen beef rose 16.8 per cent.
Offsetting December’s inflation hike was a 13.8 per cent drop in the cost of gasoline, StatCan said. The agency pointed to an oversupply of crude oil globally that drove down prices.
While the cost of air transportation was marginally lower year-over-year, StatCan said airfare prices jumped 34.5 per cent month-over-month – outpacing the previous year’s holiday price hike. The cost of travel tours also rose on a monthly basis, which StatCan attributed to higher prices for U.S. destinations.
The December inflation figures will be the Bank of Canada’s last look at price data before it makes its first interest rate decision of the year next week. The central bank held its benchmark interest rate steady at 2.25 per cent in December.
The Bank of Canada will also release updated quarterly surveys of businesses and consumers later in the morning Monday.
This report by The Canadian Press was first published Jan. 19, 2026.
