In December 2024, Canada’s annual inflation rate fell to 1.8%, which has been attributed to the government’s GST/HST break. In January, it bumped to 1.9%.
Restaurant food purchases and alcohol purchases from stores are the largest contributing factors.
The break started on Dec. 14th, 2024 and ended on Feb. 15th, 2025. Statistics Canada estimated inflation would have reached 2.2% from 1.9% without it.
In addition, StatsCan illustrated that consumer prices would have grown at a 2.7% rate. Excluding the tax break, prices were up 2.3% in December.
Inflation rates going forward
Nathan Janzen, RBC assistant chief economist, believes inflation will drop to 1.7%. because of the tax break. He stated:
“The tax holiday will continue to muddy inflation readings until March when we can get a cleaner read of the consumer price index that are clear of distortions.”
Greater gasoline and natural gas costs counteracted some of the changes in broader consumer prices made by the sales tax relief (Reuters).
Without this tax relief, the overall consumer price index would have risen by 2.7%.
For more on this story, click here.
Click here for more stories like this.
