Canada Inflation Eases to 2.3% in January

Canada's annual inflation rate eased to 2.3 percent in January, slightly below economist forecasts of 2.4 percent, as lower gasoline prices and moderating shelter costs offset distortions from a temporary federal tax break a year earlier.

Statistics Canada reported Tuesday that the consumer price index remained flat on a month-to-month basis, defying expectations for a 0.1 percent increase. The slowdown from December's 2.4 percent rate stemmed largely from base-year effects in energy prices. Gasoline costs fell 16.7 percent year-over-year, reflecting the lingering impact of the consumer carbon price's elimination in April of the previous year. This decline helped temper broader price pressures amid ongoing economic uncertainties.

Food inflation, however, accelerated to 7.3 percent annually, driven by a 12.3 percent surge in restaurant meals. The increase was primarily mechanical, tied to the federal government's two-month sales tax holiday that began in mid-December 2024 and fully covered January 2025. That policy waived the federal portion of sales tax on dining out, certain groceries, children's clothing, toys, alcohol, and other household items, creating a distorted...