Canada’s inflation picture turned mixed in December, with headline pressure firming but core measures easing. CPI accelerated to 2.4% yoy, up from 2.2% and above expectations of 2.2%. According to Statistics Canada, the pickup in headline inflation was largely technical rather than demand-driven.
The acceleration was driven by base effects linked to the temporary GST/HST tax break that began in mid-December 2024. As exempt goods and services dropped out of the year-over-year comparison, this mechanically pushed headline CPI higher. That effect was partly offset by a year-over-year decline in gasoline prices. Excluding gasoline, CPI rose 3.0% yoy, up from 2.6% yoy in November.
Nevertheless, core measures offered reassurance. CPI median slowed from 2.8% to 2.5%, CPI trimmed eased from 2.9% to 2.7%, both below expectations. CPI common held steady at 2.8%. matched expectations.
