Canada Inflation Cools Slightly to 2.3% in January — Update

By Robb M. Stewart

OTTAWA--Consumer price pressures in Canada eased slightly in the first month of the year as prices at the pump fell sharply.

The consumer-price index rose 2.3% from a year earlier in January, Statistics Canada said Tuesday. Economists had been expecting the pace of inflation to hold steady after accelerating to 2.4% in December.

The slowdown was thanks in large part to a 16.7% drop in gasoline prices, which helped counter an upward skew from comparisons with last winter when the federal government temporarily froze the sales tax on some purchases.

Consumer prices were unchanged from the prior month, and edged up 0.1% on a seasonally adjusted basis, the national statistics agency said.

The inflation reading is the first since the Bank of Canada last month again left its policy interest rate unchanged and one of two before policymakers next decide on rates March 18. Annual inflation has been inside the 1%-to-3% band targeted by the central bank for the last two years, and policymakers project it will remain close to 2% this year.

The trimmed mean and weighted median measures of underlying inflation preferred by the Bank of Canada continued to slow and were running at their coolest level since the final month of 2024. The measures averaged 2.45% annually, compared with 2.6% in November, which is running in line with the central bank's forecast for the first quarter.

Traditional core inflation, which excludes volatile food and energy costs, also eased to 2.4% on a year earlier after a 2.5% rise in December.

Bank of Canada surveys show that businesses' short-term inflation expectations remain close to 3%, while consumer expectations for inflation near term are still elevated but longer-term views have softened. Food prices and rent remain areas of worry for Canadians struggling with the cost of living.

Shelter costs for Canadians continue to decelerate, rising 1.7% for the latest month, marking the first time in almost five years shelter expenses have advanced by less than 2%. Rent prices slowed, though at 4.9% still outpaced headline inflation, while mortgage-interest costs rose 1.2% on a year earlier after a 1.7% increase in December.

Canadians also paid less for cellular services in January, following six consecutive months of upward pressures, and on a month-over-month basis cell costs dipped 0.8%.

Prices for food bought at stores were up 4.8% year over year, after a 5.0% increase the month before, thanks mainly to a decline in prices for fresh fruit.

Items affected by the year-earlier tax holiday saw a rise in comparable prices, particularly for restaurant meals and, to a lesser degree, for alcoholic drinks, toys and children's clothing.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

February 17, 2026 09:06 ET (14:06 GMT)