Economists are preparing to dissect the latest inflation data from Statistics Canada, set for release on Monday, with expectations that price growth remained stable as 2025 drew to a close.
Forecast Points to Steady Price Pressures
A recent survey of economists conducted by Reuters, using data from LSEG Data & Analytics, projects that the annual inflation rate held firm at 2.2 per cent in December 2025. This figure would indicate a continuation of the controlled price environment witnessed in recent months.
Analyst Predicts a Slight Uptick Amid Seasonal Noise
However, not all forecasts align perfectly. Benjamin Reitzes, an economist at BMO, offers a slightly different perspective. He anticipates that the inflation rate actually ticked up to 2.3 per cent in December, even in the face of a significant drop in gasoline prices last month.
Reitzes points to a unique distortion in the year-over-year comparisons. December is typically a season for discounts, but prices fell more sharply in December 2024. This was due to the federal government's temporary "tax holiday," which took effect mid-month and reduced prices on a range of household goods.
"That's going to show a jump in grocery prices in the annual comparisons," Reitzes explained. He further cautioned that recent trends in producer prices suggest food inflation will keep accelerating in the months ahead.
Implications for the Bank of Canada
Despite these nuances, Reitzes believes the December inflation figures are "unlikely" to prompt the Bank of Canada into immediate action. The central bank is scheduled to make its first interest rate decision of the year later this month, and most analysts expect it to remain on the sidelines, closely monitoring economic indicators.
The data release will provide a crucial snapshot of Canada's economic health as it enters a new year, offering insights into whether the battle against sustained price increases is being won.
