The Daily — Consumer Price Index, December 2025

Canada’s December 2025 CPI Climbs to 2.4% Year Over Year as GST/HST Base-Year Effect Lingers

breaking: Canada’s inflation pace picked up in December 2025, with the consumer Price Index (CPI) rising 2.4% from a year earlier,up from 2.2% in November. The uptick is largely attributed to a base-year effect tied to a temporary GST/HST exemption that ran from December 14, 2024 to February 15, 2025.

On the month, inflation experienced a mixed path. The overall CPI posted a 0.3% increase when seasonally adjusted, while the unadjusted measure declined by 0.2% from November. Energy markets and specific categories continue to influence the monthly delta.

Why the December Move happened

The year-over-year acceleration was driven by the GST/HST relief, which briefly lowered prices in late 2024. As the exemption ended, several goods and services moved back into yearly comparisons, nudging the headline CPI higher.Excluding gasoline, the CPI still rose by 3.0% year over year in December, signaling persistent price pressures despite the tax-base effect fading.

Sector Highlights

Dining out led the gains, with restaurant prices up 8.5% year over year in December. Alcoholic beverages served in bars climbed 6.5%,while alcohol bought in stores rose 5.6%. Other notable increases included toys, games and hobby supplies (+7.5%) and children’s clothing (+4.8%).

Grocery bills continued their upward path, with items bought at stores up 5.0% from December 2024. Coffee remained a key contributor, along with higher prices for beef in fresh or frozen form.

Gasoline prices continued a steep year-over-year decline, easing 13.8% in December after a 7.8% drop in November. A 7.1% monthly decline helped drive the big year-over-year drop, reflecting global energy-market dynamics and oversupply conditions.

Regional Snapshot

Inflation accelerated in nine provinces year over year, reflecting a broad spread of price movements. british Columbia saw a slower pace, helped by the base-year effect in traveler accommodation, but other provinces posted firmer gains as the year closed.

Key CPI Figures — December 2025

Metric	December 2025	Year-over-Year Change	Notes
All-items CPI	2.4%	+0.2 pp from Dec 2024	Year-over-year change
All-items CPI (MoM, seasonally adjusted)	0.3%	—	Monthly move
All-items CPI (MoM, not seasonally adjusted)	-0.2%	—	Monthly move
CPI excluding gasoline	3.0%	—	Excludes gasoline
Gasoline	-13.8%	—	Year-over-year decline
Food purchased from stores	5.0%	—	Major grocery items
Restaurants	8.5%	—	Largest contributor
Shelter	2.1%	—	Household costs component
Transportation	-0.5%	—	Year-over-year 12-month change
Toys, games, hobby supplies	7.5%	—	Spurred by consumer items
Beef and dairy or other staples	varied	—	Contributors vary by item

What It means For Canadians

The December reading places inflation in a relatively contained zone, near typical policy targets. Energy prices are a key variable to watch, given their volatility in global markets. Simultaneously occurring, price gains in dining out and groceries could continue to weigh on household budgets as the GST/HST base-year effects fade fully.

Looking Ahead

The next CPI update is due on February 16, 2026, covering January 2026 data.Analysts will monitor whether inflation continues easing as tax-related distortions fade and energy dynamics evolve.

Reader question 1: How is the December CPI shift affecting your household budget right now?

Reader question 2: Do you expect inflation to keep easing in 2026, or could new price pressures re-emerge?

Disclaimer: This article provides general information and shoudl not be taken as financial advice. Inflation data can change with revisions from Statistics Canada.

Share your thoughts below and join the discussion on how these numbers shape your finances this winter.

>South: CPI increase 3.4 % YoY – energy prices fell sharply, dragging the overall figure down.

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The Daily — Consumer Price Index, December 2025

Swift Snapshot of December 2025 CPI

• Headline CPI (YoY): 3.3 % – the slowest annual increase since mid‑2022.
• Core CPI (excluding food & energy, YoY): 3.6 %,indicating underlying price pressure remains modest.
• Monthly change: +0.2 % from November 2025, matching the median month‑over‑month gain for the past year.
• Data source: U.S.Bureau of Labor Statistics (BLS) release, 12 December 2025.

Category‑Level Highlights

Category	YoY Change	Monthly Change
Food & beverages	4.1 %	+0.3 %
Energy (gasoline, electricity)	‑1.5 %	‑0.2 %
Shelter (rent, owners’ equivalent rent)	2.8 %	+0.2 %
Medical care	3.9 %	+0.1 %
Education & interaction	2.8 %	+0.2 %
Transportation (excluding energy)	2.5 %	+0.1 %

Core vs. Headline: why the Difference Matters

1. Core CPI strips out volatile food and energy prices, giving policymakers a clearer view of inflation trends.
2. Headline CPI reflects the actual cost burden on households, especially for groceries and travel.
3. In December 2025, the 0.3 % gap between core (3.6 %) and headline (3.3 %) suggests that energy price declines are offsetting higher food costs.

Regional Inflation Patterns

• West Coast: CPI increase 2.9 % YoY – lower than the national average, driven by subdued housing costs.
• Midwest: CPI increase 3.6 % YoY – higher due to stronger food price growth.
• South: CPI increase 3.4 % YoY – energy prices fell sharply, dragging the overall figure down.
• Northeast: CPI increase 3.5 % YoY – balanced mix of shelter and medical care inflation.

Impact on federal Reserve Policy

• Interest‑rate outlook: The Fed’s November 2025 meeting kept the target range at 5.25 %–5.50 %. The December CPI reading, showing a gradual slowdown, reinforces expectations that the Fed will maintain rates through early 2026 before considering a modest cut.
• Forward guidance: The BLS data aligns with the Fed’s “moderate‑inflation” narrative, suggesting a continued focus on price stability rather than aggressive tightening.

Practical Tips for Consumers

1. Budget for food: With a 4.1 % YoY rise,allocate an extra 2–3 % of discretionary spending to groceries.
2. Energy savings: The ‑1.5 % drop in energy prices offers an opportunity to lock in lower rates via fixed‑rate utility plans or invest in energy‑efficient appliances.
3. Housing costs: Even a modest 0.2 % monthly increase in shelter costs calls for rent negotiation or exploring suburban options where rent growth is slower.
4. Medical expenses: Anticipate a 3.9 % rise in health‑care costs; consider HSAs, bundled service plans, or telehealth to manage out‑of‑pocket spending.

Historical Comparison (2022‑2025)

Year	Headline CPI YoY	Core CPI YoY
2022	6.5 %	5.8 %
2023	4.9 %	4.4 %
2024	3.7 %	3.9 %
2025 (Dec)	3.3 %	3.6 %

– Trend: A clear downward trajectory since 2022, with the December 2025 data confirming the longest stretch of sub‑4 % inflation in the past four years.

How the CPI Is Calculated – Key Methodology

1. Sample basket: BLS surveys over 200,000 prices each month across about 800 items.
2. Weighting: Each category is weighted according to its share of average consumer spending (e.g., housing ~30 %).
3. Seasonal adjustment: Removes predictable seasonal patterns, allowing month‑to‑month comparison.
4. Geographic coverage: Data collected from urban areas representing roughly 93 % of the U.S. population.

Real‑World Example: Retail Pricing Adjustments

• Major grocery chains (e.g., Kroger, Walmart) announced price hikes of 2–3 % on fresh produce in early January 2026, directly reflecting the 4.1 % YoY food price increase reported by the CPI.
• Airlines such as United and Delta lowered fuel surcharges by 1 %, citing the -1.5 % energy price change.

Frequently Asked Questions

Q1: Does a lower headline CPI mean my paycheck will go further?

• A: Not necessarily. While overall inflation eases, specific categories like food remain pricey, and wage growth has been modest (average 2.1 % YoY in Q4 2025).

Q2: How will the CPI affect my mortgage rate?

• A: Mortgage rates are more tightly linked to Fed funds rates and 10‑year Treasury yields.The recent CPI slowdown reduces pressure on the Fed to raise rates further, perhaps stabilizing mortgage rates around 6.3 %–6.5 %.

Q3: are the CPI numbers reliable?

• A: The BLS uses rigorous sampling and quality‑control protocols. though, regional variations and online price data can cause minor deviations from individual experiences.

Takeaway metrics for Quick Reference

• Headline CPI YoY: 3.3 %
• Core CPI YoY: 3.6 %
• Food & beverages YoY: 4.1 %
• Energy YoY: –1.5 %
• Shelter YoY: 2.8 %
• Fed target rate (Nov 2025): 5.25 %–5.50 %

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