Canada Inflation Rate in 2026
The current annual inflation rate in Canada is 1.7% as of the most recent Statistics Canada CPI release, representing the year-over-year change in the all-items Consumer Price Index.
| Metric | Value |
|---|---|
| Current annual inflation rate | 1.7% |
| Bank of Canada target | 2.0% (midpoint of 1%–3% range) |
| Current Bank of Canada overnight rate | 2.75% |
| CPI index value (latest) | ~163.5 (base year 2002 = 100) |
After peaking at 6.8% in June 2022 — the highest rate in 40 years — Canadian inflation has steadily declined through 2023, 2024, and into 2025–2026 as the Bank of Canada’s aggressive rate hikes took effect.
Monthly CPI Inflation Rate (2024–2026)
| Month | 2024 | 2025 | 2026 |
|---|---|---|---|
| January | 2.9% | 1.9% | 1.5% |
| February | 2.8% | 2.6% | 1.6% |
| March | 2.9% | 2.3% | — |
| April | 2.7% | 1.7% | — |
| May | 2.9% | — | — |
| June | 2.7% | — | — |
| July | 2.5% | — | — |
| August | 2.0% | — | — |
| September | 1.6% | — | — |
| October | 2.0% | — | — |
| November | 1.9% | — | — |
| December | 1.8% | — | — |
Source: Statistics Canada, Table 18-10-0004-01. Year-over-year percentage change in CPI, all items.
Annual Inflation Rate History (1990–2025)
| Year | Inflation Rate | Year | Inflation Rate | Year | Inflation Rate |
|---|---|---|---|---|---|
| 1990 | 4.8% | 2002 | 2.3% | 2014 | 1.9% |
| 1991 | 5.6% | 2003 | 2.8% | 2015 | 1.1% |
| 1992 | 1.5% | 2004 | 1.9% | 2016 | 1.4% |
| 1993 | 1.8% | 2005 | 2.2% | 2017 | 1.6% |
| 1994 | 0.2% | 2006 | 2.0% | 2018 | 2.3% |
| 1995 | 2.2% | 2007 | 2.1% | 2019 | 1.9% |
| 1996 | 1.6% | 2008 | 2.4% | 2020 | 0.7% |
| 1997 | 1.6% | 2009 | 0.3% | 2021 | 3.4% |
| 1998 | 1.0% | 2010 | 1.8% | 2022 | 6.8% |
| 1999 | 1.7% | 2011 | 2.9% | 2023 | 3.9% |
| 2000 | 2.7% | 2012 | 1.5% | 2024 | 2.4% |
| 2001 | 2.5% | 2013 | 0.9% | 2025 | ~2.0% |
Source: Statistics Canada CPI annual averages.
Key historical periods:
- 1990–1991 (5%+): Last gasp of late-1980s inflation before the Bank of Canada adopted the 2% target in 1991
- 1994 (0.2%): Near-deflation following aggressive early-1990s rate hikes
- 2009 (0.3%): Global financial crisis drove inflation to near-zero
- 2020 (0.7%): COVID-19 pandemic lockdowns suppressed demand
- 2021–2022 (3.4% → 6.8%): Post-pandemic supply chain disruptions + global energy shock created the worst inflation in 40 years
- 2023–2026 (declining): Bank of Canada rate hikes brought inflation back toward target
Annual Inflation Rate History (1915–1990)
| Year | Rate | Year | Rate | Year | Rate | Year | Rate |
|---|---|---|---|---|---|---|---|
| 1915 | 1.6% | 1935 | 1.0% | 1955 | 0.2% | 1975 | 10.8% |
| 1916 | 7.9% | 1936 | 1.3% | 1956 | 1.5% | 1976 | 7.5% |
| 1917 | 18.1% | 1937 | 4.0% | 1957 | 3.2% | 1977 | 8.0% |
| 1918 | 13.6% | 1938 | -1.3% | 1958 | 2.6% | 1978 | 9.0% |
| 1919 | 7.6% | 1939 | 0.0% | 1959 | 1.3% | 1979 | 9.1% |
| 1920 | 15.7% | 1940 | 3.9% | 1960 | 1.3% | 1980 | 10.1% |
| 1921 | -12.6% | 1941 | 4.5% | 1961 | 0.8% | 1981 | 12.5% |
| 1922 | -8.9% | 1942 | 3.0% | 1962 | 1.2% | 1982 | 10.8% |
| 1923 | -0.7% | 1943 | 1.7% | 1963 | 1.7% | 1983 | 5.8% |
| 1924 | 0.3% | 1944 | 0.8% | 1964 | 1.8% | 1984 | 4.3% |
| 1925 | -0.5% | 1945 | 0.8% | 1965 | 2.4% | 1985 | 4.0% |
| 1926 | 0.0% | 1946 | 3.3% | 1966 | 3.7% | 1986 | 4.2% |
| 1927 | -1.6% | 1947 | 9.6% | 1967 | 3.6% | 1987 | 4.4% |
| 1928 | -0.5% | 1948 | 14.3% | 1968 | 4.0% | 1988 | 4.0% |
| 1929 | -0.5% | 1949 | 3.1% | 1969 | 4.5% | 1989 | 5.0% |
| 1930 | -2.1% | 1950 | 2.9% | 1970 | 3.3% | 1990 | 4.8% |
| 1931 | -8.6% | 1951 | 10.6% | 1971 | 2.9% | ||
| 1932 | -7.8% | 1952 | 2.4% | 1972 | 4.8% | ||
| 1933 | -5.7% | 1953 | -1.0% | 1973 | 7.6% | ||
| 1934 | 1.1% | 1954 | 0.7% | 1974 | 10.9% |
Source: Statistics Canada historical CPI series and Bank of Canada historical data.
Notable historical events:
- 1917 (18.1%): World War I supply shortages and war spending created extreme inflation
- 1920 (15.7%): Post-WWI boom; followed by sharp deflation in 1921 (-12.6%)
- 1921 (-12.6%): One of the steepest deflation years in Canadian history
- 1930–1933 (-2% to -8%): Great Depression era — sustained deflation
- 1947–1948 (9.6% → 14.3%): Post-WWII pent-up demand and Korean War buildup
- 1951 (10.6%): Korean War commodity boom
- 1974–1975 (10.9% → 10.8%): OPEC oil crisis
- 1981 (12.5%): Peak of the late-1970s inflation crisis; Bank of Canada pushed overnight rate above 20% to break inflation
CPI by Category (Current Year)
The all-items CPI is a weighted average of eight major categories. Each category experiences inflation at a different rate:
| Category | Weight in CPI Basket | Recent Annual Change | Trend |
|---|---|---|---|
| Food | 16.4% | 3.8% | Above target; grocery costs remain elevated |
| Shelter | 29.8% | 3.4% | Largest weight; mortgage interest + rent driving |
| Household operations, furnishings, equipment | 13.5% | 1.1% | Near target |
| Clothing and footwear | 4.9% | -0.8% | Deflation; competition from online retail |
| Transportation | 15.4% | -1.9% | Deflation; lower gas prices |
| Health and personal care | 5.0% | 1.9% | Near target |
| Recreation, education, and reading | 10.3% | 1.4% | Moderate |
| Alcoholic beverages, tobacco, recreational cannabis | 4.7% | 2.1% | Excise tax increases |
Source: Statistics Canada CPI basket weights and latest monthly release.
Key observations:
- Shelter (29.8% of basket) is the single largest component and has been the primary driver of elevated inflation in 2023–2025. Mortgage interest costs, rents, and property taxes directly affect this category
- Food (16.4%) remains above the 2% target, driven by input costs, supply chain adjustments, and global agricultural commodity prices
- Transportation has seen deflation due to lower gasoline prices, but auto insurance and maintenance costs remain elevated
- Clothing consistently sees low or negative inflation due to global competition and fast-fashion supply chains
What Is the CPI Basket?
The Consumer Price Index tracks the cost of a representative basket of goods and services that a typical Canadian household purchases. Statistics Canada updates the basket periodically to reflect changing spending patterns.
How the CPI basket is constructed:
- Survey of Household Spending (SHS): Statistics Canada surveys thousands of households to determine how Canadians spend their money
- Weighting: Each category receives a weight based on its share of total household spending (e.g., shelter gets ~30% because Canadians spend about 30 cents of every dollar on housing)
- Price collection: Prices are collected monthly from retailers, service providers, landlords, and public sources across Canada
- Index calculation: The current basket cost is compared to a base period (currently 2002 = 100) to produce the index value
Items in the CPI basket include:
| Category | Example Items |
|---|---|
| Food | Bread, milk, beef, chicken, fresh vegetables, restaurant meals, coffee |
| Shelter | Rent, mortgage interest, property taxes, home insurance, maintenance, electricity, natural gas |
| Transportation | Gasoline, car purchases, car insurance, public transit, air travel |
| Household | Furniture, appliances, internet, cell phone plans, child care |
| Clothing | Men’s/women’s clothing, children’s clothing, footwear |
| Health | Prescription drugs, dental care, eye care, personal care products |
| Recreation | Travel, streaming subscriptions, sports equipment, tuition, books |
| Alcohol & tobacco | Beer, wine, spirits, cigarettes, cannabis |
What CPI does NOT include:
- Income taxes
- RRSP or TFSA contributions (savings)
- Capital gains or losses on investments
- Mortgage principal repayment (only interest is counted)
- Land purchases
Bank of Canada Monetary Policy and Inflation
The Bank of Canada has targeted a 2% inflation rate since 1991, within a control range of 1%–3%. This target is jointly set with the federal government and renewed every five years.
How the Bank of Canada controls inflation:
| Tool | How It Works |
|---|---|
| Overnight rate | Raising the rate makes borrowing more expensive, slowing spending and investment. Lowering it stimulates the economy. |
| Forward guidance | Signaling future rate intentions to influence market expectations and behaviour. |
| Quantitative easing/tightening | Buying or selling government bonds to increase or reduce money supply (used during COVID). |
Recent Bank of Canada rate decisions and inflation context:
| Date | Rate Decision | Overnight Rate | Inflation at Decision |
|---|---|---|---|
| March 2022 | +0.25% (first hike) | 0.50% | 5.7% |
| July 2022 | +1.00% (largest single hike) | 2.50% | 7.6% |
| January 2023 | +0.25% (final hike of cycle) | 4.50% | 5.9% |
| June 2024 | -0.25% (first cut) | 4.75% | 2.7% |
| October 2024 | -0.50% | 3.75% | 2.0% |
| January 2025 | -0.25% | 3.00% | 1.9% |
| March 2025 | -0.25% | 2.75% | 2.3% |
The Bank raised rates aggressively from March 2022 through January 2023 to combat post-pandemic inflation, then began cutting in June 2024 as inflation returned to near the 2% target.
Inflation by Province
Provincial inflation rates differ based on local housing costs, energy prices, and economic conditions:
| Province | Recent Annual CPI Change | Key Driver |
|---|---|---|
| British Columbia | ~2.1% | High shelter costs; rent increases |
| Alberta | ~1.5% | Lower energy costs; moderate housing |
| Saskatchewan | ~1.8% | Stable; agriculture-linked |
| Manitoba | ~1.6% | Moderate; lower housing costs |
| Ontario | ~2.2% | High shelter costs; mortgage interest |
| Quebec | ~1.9% | Moderate housing; food costs |
| New Brunswick | ~2.3% | Immigration-driven housing demand |
| Nova Scotia | ~2.5% | Rapid population growth; housing shortage |
| PEI | ~2.8% | Fastest housing price growth in Atlantic Canada |
| Newfoundland & Labrador | ~1.4% | Low population growth; moderating shelter costs |
Source: Statistics Canada CPI by province. Figures approximate based on recent data.
Why inflation varies by province:
- Shelter costs — Provinces with rapidly rising housing costs (PEI, NS, NB, ON, BC) tend to have higher overall inflation because shelter is 30% of the CPI basket
- Energy — Alberta and Saskatchewan produce oil and gas, which can moderate local fuel costs. Atlantic provinces rely on imports, making them more sensitive to global energy prices
- Provincial taxes — PST/HST differences affect consumer prices. Alberta has no PST, which means some goods are cheaper
- Food supply — Northern provinces and remote areas face higher food transportation costs
Core Inflation Measures
The Bank of Canada uses three measures of core inflation to filter out temporary price swings and identify underlying inflation trends:
| Measure | What It Excludes | Purpose |
|---|---|---|
| CPI-trim | Most volatile 20% of items (top and bottom 10%) | Shows the central tendency of price changes |
| CPI-median | All items except the one at the 50th percentile of price changes | Shows the middle point of inflation distribution |
| CPI-common | Uses a statistical model to track common price movements | Identifies broad-based inflation vs isolated price shocks |
The Bank uses these core measures to look through temporary shocks (e.g., a spike in gasoline prices) and assess whether underlying inflation is on track for the 2% target.
Recent core inflation readings:
| Measure | Latest Reading |
|---|---|
| CPI-trim | ~2.4% |
| CPI-median | ~2.5% |
| CPI-common | ~2.1% |
Core inflation running near 2%–2.5% suggests that underlying price pressures have largely returned to normal after the 2022–2023 inflation shock.
What $100 Bought in the Past
To put inflation in everyday terms, here is what $100 in various years would need to be in today’s dollars (2026) to have the same purchasing power:
| Year | $100 Then = Today | Total Inflation Since |
|---|---|---|
| 1970 | ~$835 | 735% |
| 1980 | ~$395 | 295% |
| 1990 | ~$225 | 125% |
| 2000 | ~$175 | 75% |
| 2005 | ~$155 | 55% |
| 2010 | ~$140 | 40% |
| 2015 | ~$125 | 25% |
| 2020 | ~$115 | 15% |
A dollar in 1970 has roughly 12 cents of purchasing power today. Even from 2010, 30% of purchasing power has been lost.
Use the Inflation Calculator to calculate the exact value for any two years.
How Inflation Affects Canadians
Income and wages
- If your pay raise is less than the inflation rate, you are effectively taking a pay cut in real terms
- Use the Salary Calculator to evaluate your real income
- Minimum wage increases are often benchmarked to CPI in several provinces
Savings and GICs
- A savings account earning 3% with inflation at 2% provides only 1% real return
- GIC rates must exceed inflation to provide real returns
- HISA accounts are useful for short-term, but holding too much cash for years results in purchasing power erosion
Government benefits
- CPP is adjusted annually based on CPI
- OAS is adjusted quarterly based on CPI
- GIS is adjusted quarterly based on CPI
- The Basic Personal Amount (tax-free income threshold) is indexed to CPI — currently $16,129 in 2025
- TFSA contribution room is indexed to CPI in $500 increments — currently $7,000 per year
Mortgages and housing
- Fixed mortgage rates are influenced by bond yields, which reflect inflation expectations
- Variable mortgage rates are tied to the Bank of Canada’s overnight rate, which responds to inflation
- Homeownership is generally a good inflation hedge because property values tend to rise with or above inflation over time
Investments
- Equities historically outpace inflation over the long term — the S&P/TSX Composite Index has returned ~9% annually including dividends
- Real Return Bonds (RRBs) are indexed to CPI and provide direct inflation protection
- Gold is a traditional inflation hedge — see best gold ETFs
- Always evaluate investments on their real return (nominal return minus inflation), not just the headline number
Related Pages
- Inflation Calculator — Calculate the impact of inflation on any dollar amount between any two years
- Bank of Canada Rate History — Historical overnight rates and their relationship to inflation
- Interest Rate Forecast — Where rates are heading based on inflation outlook
- Prime Rate — Current bank prime rate tied to Bank of Canada decisions
- Best GIC Rates — Compare GIC returns vs inflation
- Best HISA Rates — High-interest savings rates
- Salary Calculator — Evaluate real wages after inflation
- TFSA Contribution Room — Indexed to CPI annually