Consumer price index

The consumer price index reached 158.4 in 2025, reflecting continued but moderating inflationary pressures across the Canadian economy. Canada's inflation rate decreased to 1.7% year-over-year by July 2025, down from 1.9% in June, indicating successful progress toward the Bank of Canada's 2% target. However, underlying inflation showed concerning signs of acceleration, with core measures CPI-trim and CPI-median reaching 3.1% and 3.2% respectively in certain months, surpassing the 3% threshold for the first time since early 2024. Food price inflation remained elevated, with forecasts suggesting overall food prices would increase by 3% to 5% throughout 2025, requiring an average family of four to spend $16,833.67 on food, an increase of up to $801.56 from the previous year. Energy price volatility continued to influence headline inflation, particularly due to carbon tax policy changes and gasoline price fluctuations.

The consumer price index increased significantly over the past five years, rising from 135.6 in 2020 to 158.4 in 2025, representing a 16.8% cumulative increase. This period encompassed the most volatile inflationary environment Canada had experienced in decades, beginning with pandemic-related price disruptions and evolving through supply chain challenges, policy responses, and economic recovery. The most dramatic acceleration occurred during 2021-2022, when the index surged from 139.4 to 147.3, reflecting broad-based price pressures across multiple categories.

Inflationary pressures intensified through 2021-2023 as pandemic-related supply disruptions coincided with expansionary fiscal and monetary policies. The index reached 152.5 in 2023, marking peak inflationary concerns before beginning to moderate. Food and energy prices drove much of the volatility, with restaurant prices experiencing particular acceleration as businesses adjusted to labor shortages and input cost increases. Shelter costs remained persistently elevated, with mortgage interest costs and rental prices contributing substantially to overall index growth throughout the period.

The period also witnessed significant policy interventions affecting price dynamics. Carbon tax implementations and modifications created volatility in energy-related components, while GST/HST tax holidays provided temporary relief in specific categories. Supply chain disruptions initially caused by pandemic lockdowns evolved into longer-term structural challenges, affecting goods availability and pricing across multiple sectors. Travel and tourism prices experienced extreme volatility, initially collapsing during travel restrictions before rebounding sharply as restrictions lifted.

By 2024-2025, inflationary pressures began moderating as monetary policy tightening took effect and supply chain disruptions eased. However, underlying inflation metrics occasionally spiked above target levels, suggesting persistent price pressures in certain sectors, particularly services. The cumulative 16.8% increase over five years significantly exceeded the Bank of Canada's 2% annual target, representing substantial erosion in purchasing power for Canadian consumers.