The Canadian Consumer Price Index increased 2.3% on a year-over-year basis in January, a modest deceleration from the 2.4% gain registered in December. The Bureau responsible for the data highlighted falling gasoline costs as the principal influence behind the softer headline reading.
Gasoline prices plunged 16.7% compared with the same month a year earlier, after a 13.8% year-over-year decline in December. Statistics Canada said that "the gasoline price index was the largest contributor to deceleration in headline inflation, with a larger decline in January compared with December." The decline in fuel costs therefore accounted for much of the movement in the all-items measure.
Stripping out gasoline, underlying inflation pressures remained intact. Excluding the volatile gasoline category, the CPI rose 3.0% in January, unchanged from the pace observed in December. That persistence in the ex-gasoline measure underscores that non-energy price growth has not eased in tandem with the headline decline.
The year-over-year comparison was also affected by a base-year distortion related to a temporary federal tax change. Statistics Canada noted that indexes impacted by the temporary GST/HST break in January 2025 continued to exert upward pressure on the year-over-year all-items increase in January 2026. The agency said the temporary tax break had lowered prices across roughly 10% of the consumer basket in early 2025, complicating direct comparisons between the two periods.
Shelter—the cost component that has weighed heavily on household budgets—showed signs of structural easing, rising 1.7% in the year to January. That represents the first time in nearly five years that shelter price growth has slipped below the 2.0% threshold, a development Statistics Canada attributed to slower increases in both rent and mortgage interest costs.
On a month-to-month basis the CPI was unchanged in January. After adjusting for seasonal patterns, the index registered a marginal 0.1% increase. "The CPI was unchanged month over month in January," the agency stated, a result that suggests a period of stabilization as policymakers, including the Bank of Canada, monitor how current interest rate settings are feeding through to the economy.
Overall, the January data show headline inflation easing modestly due to energy price movements, while broader price pressures remain in evidence, influenced in part by last year’s temporary tax break and continuing non-energy price dynamics.