OTTAWA – Economists are warning Canadians to prepare for a significant jump in food prices as the latest inflation data for January is set to be released this week. The anticipated surge is largely attributed to the expiration of a temporary “tax holiday” that had previously provided relief on essential goods and restaurant meals. With those GST/HST exemptions no longer in place, analysts expect restaurant price growth to spike above 7 percent compared to the tax-exempt levels seen during the same period last year.
Statistics Canada is scheduled to publish the January Consumer Price Index (CPI) report on Tuesday, February 17, 2026. Nathan Janzen, Assistant Chief Economist at RBC, predicts that these tax-related distortions will push the annual headline inflation rate up to 2.6 percent. While the increase is viewed by some as a “mechanical” shift due to the end of the tax break, other factors such as a weaker Canadian dollar and ongoing trade disputes with the United States are also driving up the costs of imported staples like beef and coffee.
Despite the pressure on grocery budgets, there are some signs of relief in other sectors of the economy. Lower gasoline prices, partly due to the removal of the federal carbon tax last year, continue to provide a buffer for household expenses. Additionally, recent interest rate cuts have begun to lower mortgage interest costs for many homeowners, helping to offset the rising cost of living.
The Bank of Canada is keeping a close watch on these developments as it prepares for its next interest rate announcement on March 18, 2026. While headline inflation may tick higher this month, core inflation measures—which exclude volatile items like food and energy—have shown signs of easing. Most experts believe the central bank will maintain its current policy rate of 2.25 percent as it balances the need for price stability with a desire to support the economy through a period of structural adjustment.
