Canada’s annual inflation rate slowed to 2.3 per cent in January, according to Statistics Canada data published Tuesday. Economists had expected the Consumer Price Index (CPI) to remain steady at 2.4 per cent, according to consensus estimates from BMO Economics.
As in many previous months, gasoline prices were a key factor in the change, with prices 16.7 per cent lower in January 2026 than the year before. CPI excluding gasoline rose 3.0 per cent in January, in line with December 2025.
Grocery price inflation slowed slightly to 4.8 per cent from 5.0 per cent in December, with “generally strong or stable harvests” helping bring fresh fruit prices 3.1 per cent lower than in January 2025. Shelter costs grew at a slower rate, with annual shelter inflation at 1.7 per cent in January.
“This is the first time in nearly five years that year-over-year shelter price growth has fallen below 2.0 per cent,” the report says. “Slower price growth for rent and mortgage interest cost drove the deceleration.”
Some other core inflation measures, which the Bank of Canada (BoC) watches closely, continued to decelerate in January. CPI-median and CPI-trim, which strip out extreme price swings, fell from 2.6 to 2.5 per cent and 2.7 to 2.4 per cent, respectively. CPI excluding food and energy fell from 2.5 to 2.4 per cent.
Prices for many items were lower a year ago because of lower taxes during the government GST/HST holiday, a difference that largely accounted for annual inflation rising in December 2025.
“Of the affected indexes, the CPI continued to be most impacted by acceleration in prices for restaurant meals, and to a lesser degree, prices for alcoholic beverages, toys and children’s clothing,” Statistics Canada’s January release notes. Prices for food purchased from restaurants were up 12.3 per cent year over year in January.
That same factor means data for January and the next few months “is expected to remain noisy,” Benjamin Reitzes, an economist at BMO, said in a note published Friday.
“We’re not anticipating anything in this report to shift the Bank of Canada’s neutral policy stance,” Reitzes had noted.
On a monthly basis, CPI was flat in January. Seasonally adjusted, CPI rose 0.1 per cent.
This story will be updated.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
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