Canada CPI January 2026: Headline Inflation Slows to 2.3% as Food Inflation Surge 7.3%, Exceeding Forecasts

Ottawa, ON, Canada (WNEWS CANADA) – The Canada CPI January 2026 report shows that overall inflation is slowing slightly, but higher food prices are still making it harder for people to afford daily essentials.

On February 17, Statistics Canada released new data showing the Consumer Price Index (CPI) rose 2.3% in January compared to a year ago, down from 2.4% in December 2025. This slight drop brings overall inflation closer to the central bank’s target, but food prices rose sharply.

While headline inflation in Canada slowed in January 2026, food prices surged by 7.3 percent, driven largely by a 12.3 percent increase in the cost of restaurant meals, which continues to strain Canadian families.

Statistics Canada also reported that food prices at stores rose 4.8% year over year, with both grocery and restaurant costs continuing to increase.

• Food bought at stores increased significantly over the past year, especially for meat, bakery items, and some imported products.
• Restaurant food prices also rose sharply, further adding to overall food inflation.
• Some foods, such as fresh produce, saw smaller price increases, but these were not enough to offset larger jumps in other categories.

Restaurant prices are higher because of rising labour and operating costs. Grocery prices are still being pushed up by supply chain disruptions, transportation costs, and currency fluctuations for imported goods.

Even though energy prices are falling, grocery bills are still high for Canadian households. This hits lower- and middle-income families hardest, since they spend more of their income on food.

There are also practical steps that can help manage grocery budgets. Planning meals ahead of time and making shopping lists based on sales can help avoid impulse buys and reduce food waste. Comparing unit prices and switching to store brands can also offer savings without sacrificing quality. For those who need extra help, many retailers offer weekly discount days or loyalty programs that provide ongoing savings at checkout.

Headline CPI Moderates on Energy Decline

While food prices climbed quickly, overall inflation slowed mainly because gasoline prices dropped sharply since January 2025. Lower energy costs helped offset higher prices for other essentials. This drop in energy was a key reason headline inflation fell to 2.3 percent. A major part of inflation has been rising lately, but not as fast as in 2024 and early 2025. Mortgage interest costs are still high compared to before rates increased, but the pace of increases is slowing.

The January CPI data showed that inflation rates varied across Canadian provinces. While national headline inflation was 2.3%, local factors, housing costs, and base-year effects led to differences. According to Statistics Canada, annual price growth across Canada slowed slightly to 2.3 percent in January from 2.4 percent in December, with regional differences showing that some provinces experienced higher or lower price increases than others.

Provincial data show inflation was broadly contained nationwide in January, though regional differences persist. According to The Canadian Press, British Columbia, Alberta, and Ontario each recorded an annual inflation rate of 2.0 percent in January 2026, which was slightly below the national average of 2.3 percent. The Atlantic provinces showed varying inflation rates: Newfoundland and Labrador at 2.4 percent, Nova Scotia at 2.7 percent, Prince Edward Island at 1.8 percent, and New Brunswick at 2.9 percent. Quebec posted inflation of 2.2%, while Manitoba recorded 2.0%. The data suggest that Western provinces are currently experiencing slightly stronger price momentum than Eastern Canada, though no province is significantly diverging from the national trend.

Core inflation, which the Bank of Canada monitors closely, remained near the top of the central bank’s 1% to 3% target range.

Mixed Signals for the Bank of Canada

The Canada CPI for January 2026 presents a mixed picture for policymakers.

The decrease from 2.4% to 2.3% means overall inflation is moving closer to the Bank of Canada’s 2% target. According to Global News, while overall inflation in Canada eased to 2.3% in January, food prices continued to rise, leaving many Canadians feeling financial strain even as the headline inflation rate is lower.

Right now, markets expect the Bank of Canada to keep interest rates steady for a while. If inflation continues to decline and the economy slows, rates could be cut later in 2026. For Canadians, steady or lower rates often mean mortgage payments on variable-rate loans may stop rising or even go down, which can help homeowners. It also makes loans and credit cards more affordable. However, savings accounts and GIC returns may stay low, which could affect people who depend on investment income.

Affordability Still a Key Concern

Even though the headline CPI is 2.3%, inflation is not rising as quickly as before. The gap between lower energy prices and higher food costs explains why many Canadians still do not feel any relief.

People cannot cut food from their budgets. Even small price increases add up, especially after several years of higher grocery costs.

Economists say food prices have risen sharply since 2021, so households are facing not only January’s 7.3% jump but also several years of increases combined.

What Comes Next

The next CPI report will be released in mid-March. It will show whether January’s jump in food prices is a short-term change or the start of another increase. Many economists expect food prices to stay high over the next few months, though they could improve if supply chains recover and crops are strong.

A report from Dalhousie University and its partners expects food prices in Canada to rise between four and six percent in 2026. While this is a significant increase, it is a bit lower than earlier predictions. If food inflation stays at the higher end of that range while overall inflation remains near the target, policymakers could still face challenges. Stable overall prices might hide ongoing problems in key areas like food.

For now, the Canada CPI January 2026 report shows the economy is shifting. Energy costs are falling and overall inflation is slowing, but grocery bills are still making life difficult for families.

Canadians who need help can turn to organizations like Food Banks Canada and local community centers, which offer programs to help with higher costs. Government and nonprofit websites also provide tips for saving on groceries, meal planning, and finding other resources.