Inflation Climbs to 2.4% in December Following Tax Holiday Changes

Statistics Canada reported that inflation rose to 2.4% in December 2025, marking a notable increase attributed to the conclusion of a federal “tax holiday” implemented a year earlier. The end of this tax relief, which temporarily removed the Goods and Services Tax (GST) from certain items for two months starting mid-December 2024, resulted in higher consumer prices as discounts from the previous year fell out of the annual comparison.

The agency indicated that the rise in the annual inflation rate was unexpected, as economists had anticipated it would remain steady at 2.2%. The increase in inflation was primarily driven by an 8.5% percent annual surge in restaurant meal prices. Additionally, grocery prices also saw a rise, climbing to 5% year-over-year in December.

While rising food prices pressured consumers, a decrease in gasoline prices provided some relief. Gasoline costs dropped by 13.8% compared to the previous year, offsetting some of the inflationary pressures. However, an increase in airfare prices from November contributed to the overall inflation increase as consumers faced higher travel costs.

These inflation figures will be pivotal for the Bank of Canada, as they represent the last set of price data before the central bank’s first interest rate decision of the year, scheduled for next week. The Bank will need to consider this uptick in prices as it evaluates the economic landscape and its approach to monetary policy.

This analysis comes from a report published by the Canadian Press on January 19, 2026. As the government and central bank navigate these economic challenges, the impact on consumers and businesses will be closely monitored in the coming months.