Canada CPI Report: January 2026 - Inflation Eases to 2.3%
Statistics Canada released the Consumer Price Index (CPI) report for January 2026 on February 17. Here's a breakdown of the key numbers and how they compare to January 2025.
Headline Overview
| Indicator | Jan 2025 | Jan 2026 | Change (pp) |
|---|
| Headline CPI (YoY) | 1.9% | 2.3% | +0.4 |
| CPI excl. Gasoline (YoY) | 1.7% | 3.0% | +1.3 |
| CPI excl. Food & Energy (YoY) | — | 2.4% | — |
| MoM Change | +0.1% | 0.0% | -0.1 |
| MoM Seasonally Adjusted | +0.1% | +0.1% | 0.0 |
Key takeaway: Headline inflation ticked up from 1.9% in January 2025 to 2.3% in January 2026 — but the comparison is heavily distorted by the GST/HST tax holiday that was in effect in January 2025 (Dec 14, 2024 – Feb 15, 2025). Excluding indirect tax effects, YoY growth actually slowed to 2.1%.
Key Sector Inflation (Year-on-Year)
| Sector | Jan 2025 | Jan 2026 | Change (pp) |
|---|
| Shelter | 4.5% | 1.7% | -2.8 ⬇️ |
| — Rent | ~7.1% | 4.3% | -2.8 ⬇️ |
| — Mortgage Interest Cost | ~18.0% | 1.2% | -16.8 ⬇️ |
| Food (stores) | 1.9% | 4.8% | +2.9 🔴 |
| Food (restaurants) | -5.1% | 12.3% | +17.4 🔴* |
| Transportation | 3.4% | -1.7% | -5.1 ⬇️ |
| — Gasoline | +8.6% | -16.7% | -25.3 ⬇️ |
| Energy (overall) | +5.3% | -10.9% | -16.2 ⬇️ |
| Alcoholic Beverages (stores) | -3.6% | +7.9% | +11.5 🔴* |
| Cellular Services | — | +4.9% | — |
🔴* Restaurant meals and alcoholic beverages show extreme swings — this is almost entirely due to the GST/HST tax holiday. In January 2025, these items were tax-exempt, artificially lowering prices. The rebound in January 2026 reflects the return to normal taxation, not a genuine surge in underlying prices.
⬇️ Shelter fell below 2.0% YoY for the first time in nearly five years, driven by decelerating rent and mortgage interest costs — a clear sign that Bank of Canada rate cuts are feeding through.
⬇️ Gasoline plunged 16.7% YoY, the largest contributor to headline deceleration, partly due to the removal of the consumer carbon tax in April 2025.
Bank of Canada Core Measures
| Measure | Jan 2026 |
|---|
| CPI-Trim | 2.4% |
| CPI-Median | 2.5% |
| Average of Core Measures | ~2.5% |
The BoC's preferred core gauges are converging toward the 2% target, strengthening the case for continued monetary easing. The policy rate currently sits at 2.25% after 100bps of cuts in 2025.
Notable Sub-Trends
| Item | Jan 2026 YoY | Notes |
|---|
| Fresh Fruit | -3.1% | Strong harvests in producing regions |
| Toys, Games & Hobbies | +8.7% | GST holiday distortion |
| Children's Clothing | +6.3% | GST holiday distortion |
| Alcoholic Beverages (licensed) | +9.0% | GST holiday distortion |
| Cellular Services | +4.9% | Down sharply from Dec's 14.6% |
Context & Outlook
The GST/HST tax holiday distortions will fully wash out after the February 2026 data, giving a cleaner read on underlying inflation starting in March.
Grocery prices remain sticky at 4.8% — roughly double the headline rate — driven by meat, coffee, and confectionery costs.
Canada's real GDP has been essentially flat since January 2025, raising concerns about stagflation risks.
The next Bank of Canada rate decision and February CPI release are both scheduled for mid-March 2026.
Source: Statistics Canada, The Daily — Consumer Price Index, January 2026 (released Feb 17, 2026)
