Canada’s annual inflation rate eased to 1.8% in February, down from 2.3% in January, according to data released by Statistics Canada. The decline was largely driven by base-year effects, as prices had surged during the same period last year after the government’s temporary sales tax relief ended. Excluding the impact of indirect taxes, the Consumer Price Index (CPI) increased 1.9% year over year, while on a monthly basis consumer prices rose 0.5% in February.
The latest data arrives as the Bank of Canada continues to hold its key policy interest rate at 2.25%, with inflation stabilizing close to its 2% target within a 1–3% control range. Economists had expected inflation to fall to 1.9% annually and rise 0.7% month-over-month, but the actual monthly increase came in slightly lower. Analysts say inflation trends could shift again due to geopolitical tensions in the Middle East and rising crude oil prices, with the central bank expected to provide further insight in its upcoming monetary policy decision.
Despite the overall slowdown in inflation, food prices remain a significant concern for households. Food costs rose 5.4% year-over-year, with restaurant prices increasing 7.8%. Grocery prices climbed 4.1% in February, continuing a longer-term trend that has pushed grocery costs up 30% over the past five years. Meanwhile, gasoline prices fell 14.2% following the removal of a carbon tax on fuel, and shelter costs—making up roughly 29% of the CPI basket—rose 1.5% annually, with rent increasing 3.9%. Core inflation measures, including CPI-median and CPI-trim, both stood at 2.3%, indicating underlying price pressures remain moderate.
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