18 March: The annual inflation rate saw a significant increase, rising to 2.6% in February, as the federal government’s temporary tax break ended mid-month, according to Statistics Canada. This marks a notable rise from January’s 1.9% increase, when Canadians benefited from GST and HST exemptions on various household staples, common gifts, and restaurant bills for the entire month.
The February figures exceeded economists’ expectations, with a consensus forecast of 2.2% inflation for the month. Statistics Canada’s consumer price index reflects the final prices paid by Canadians, which includes sales taxes in its calculations.
Without the tax break for half of February, inflation would have reached 3%. During the period when the tax holiday was still in effect until February 15, prices for restaurant food were down by 1.4% year-over-year. However, once the sales tax was reintroduced, dining out became the largest contributor to the rise in the overall price index for February.
Items like alcoholic beverages, children’s clothing, and toys, which were also included in the tax break, saw price drops, although not as significant as in January.
Inflation increased across all provinces in February, with Ontario and New Brunswick experiencing the fastest rates of acceleration. Gas prices rose by 0.6% from January to February, but on an annual basis, there was a deceleration, which helped moderate the overall inflation rate.
In addition, Canadians faced an 18.8% increase in travel tour costs, attributed to higher demand for travel to the United States during the President’s Day weekend.
The February inflation data does not reflect the impact of tariffs or counter-tariffs between Canada and the U.S., which came into effect in March after a series of deadlines and announcements.
