Inflation eases to 2.3% in January as gas prices fall: StatCan
Statistics Canada reports that easing fuel costs and cooling shelter prices helped relieve consumer pressure in January.
StatCan announced on Tuesday that the annual inflation rate moved down to 2.3% in January, below economists’ forecast of 2.4%. Gas prices were 16.7% lower than a year earlier, largely due to the expiry of the consumer carbon price in April. This decline helped counteract a rise in food inflation, which climbed to 7.3% year over year in January.
A notable driver of the higher food costs was a 12.3% year-over-year jump in restaurant meals, driven mainly by the full effect of the federal government’s “tax holiday” from the previous year. January 2025 marked the only full month of Ottawa’s temporary tax relief, which cut portions of sales tax on dining out and various goods, creating distorted annual comparisons.
Prices for alcohol, children’s clothing, toys, and games also increased year over year due to the tax holiday effect.
Grocery store prices rose 4.8% year over year in January, a slowdown from December’s 5% increase. StatCan noted that prices for fresh fruit fell 3.1% in the month as stable growing seasons in producer regions eased prices for berries, oranges, and melons.
Shelter inflation, a long-standing pressure in the consumer price index, continued its downward trajectory at the start of the year. Rent and mortgage interest costs grew more slowly, resulting in shelter prices rising 1.7% annually in January — the first time in nearly five years that this figure has stayed below 2%.
TD senior economist Leslie Preston commented that January’s inflation data aligns with the Bank of Canada’s view that price pressures should ease further through the year, with rents and other problem areas cooling. She also noted that underlying inflation measures and core metrics remained below the Bank’s 2% target on a three-month basis.
StatCan’s January report is the Bank of Canada’s first inflation read since it left its policy rate at 2.25% last month.
Doug Porter, chief economist at BMO, said January’s progress on core inflation metrics is encouraging but cautioned that the bar for another rate cut remains high. He suggested that while a cut isn’t entirely off the table, further inflation slowdown could enable the Bank to support the economy if growth slows during the ongoing structural shift driven by trade dynamics.
The Bank of Canada will review February’s inflation developments before its next decision on March 18.
This report by The Canadian Press was first published February 17, 2026.
Craig Lord, The Canadian Press
