Inflation cooled to 1.8% in December as tax ‘holiday’ kicked off – National | Globalnews.ca
Inflation slowed further in December as Canadian consumers got a tax break from the federal government.
Statistics Canada said Tuesday that the annual pace of inflation cooled to 1.8 per cent last month. That’s down from 1.9 per cent in November.
The December inflation figures capture part of Ottawa’s GST/HST “holiday,” which began Dec. 14.
StatCan said Tuesday that prices of food bought from restaurants and alcoholic beverages — two of the categories excluded from federal tax for two months — saw a major deceleration in the annual and monthly inflation figures. Children’s clothes, toys and other hobby items also saw sizeable annual declines.

Excluding food, the consumer price index rose at a pace of 2.1 per cent, StatCan said.
Gasoline prices were up 3.5 per cent year-over-year, compared to a decline of a half a percentage point in November. The upward swing in December came in part because of a modest annual drop in the same month a year earlier; prices were down 0.4 per cent on a monthly basis.

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Travel services also saw a sharper swing up in December because of steep annual price drops a year earlier.
But prices for traveller accommodation in British Columbia also surged 62 per cent month-to-month, the same month Taylor Swift’s Eras Tour closed out in Vancouver.
“The swift month-over-month increase was the largest on record for any province and coincided with a high-profile concert series,” StatCan said.

The Bank of Canada will be poring over the latest figures ahead of its first interest rate decision of the year, set for Jan. 29.
The central bank dropped its benchmark interest rate in five consecutive decisions last year as inflation eventually fell below its two per cent target. Governor Tiff Macklem signalled that, after the series of sharp cuts, the Bank of Canada may take a more “gradual pace” of easing in 2025.
BMO chief economist Doug Porter said in a note to clients on Tuesday that, despite easing in the headline numbers, three-month measures of core inflation showed some signs of reaccelerating.
Casting a shadow over the Bank of Canada’s decisions are renewed threats of tariffs from the United States, which President Donald Trump warned late on his first day in office could come as early as Feb. 1.
But Porter said that the looming trade uncertainty with the U.S. “overrides” fears of price pressures picking back up.
“As a result, we suspect that today’s reading is just good enough to allow the Bank of Canada to trim next week, for risk management purposes,” he wrote.

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