Canada’s statistics agency will release its January consumer price index report on Tuesday, and economists are bracing for a notable increase in food inflation driven by the expiry of temporary tax relief measures implemented last year.
The federal government waived the federal portion of the Goods and Services Tax/Harmonized Sales Tax on dining out and select grocery items for two months starting in mid-December 2024. With January 2025 representing the only full calendar month benefiting from the tax change, comparisons to that period are expected to display a significant rise in prices, even if underlying price pressures remain relatively stable.
“Food price growth could spike above seven per cent, driven by rising restaurant costs compared to tax-exempt levels a year ago,” noted RBC assistant chief economist Nathan Janzen in a recent analysis, as reported by Canadian Grocer.
The anticipated surge is largely a statistical effect, economists say. The temporary tax holiday created an artificially low base for comparison. Even modest price increases in January 2026 will appear as substantial gains when measured against the lower prices of January 2025.
Desjardins’ deputy chief economist, Randall Bartlett, indicated that while the January food inflation will be largely tied to these mechanical tax changes, other factors are likewise at play. Rising costs for grocery staples like coffee and beef are contributing to overall food price movement, he said.
StatCan originally scheduled the January report for Monday, but shifted the release date to Tuesday to account for a regional holiday observed in eight provinces. The agency expects the annual rate of inflation to hold steady at 2.4 per cent in January, according to LSEG Data & Analytics, though some economists predict an acceleration to 2.6 per cent.
The Canadian Press reported that economists anticipate the January inflation figures will show a year-over-year surge in food prices. The report is expected to be released at 8:30 a.m. EST on Tuesday.
