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Canada’s annual inflation rate slowed to 1.8 percent in February, according to data from Statistics Canada released Monday. Economists had expected inflation to decline to 1.9 percent from 2.3 percent in January, based on consensus estimates from CIBC Economics.
This decrease was largely driven by base-year effects, as prices rose more slowly than in February 2025, when the conclusion of a government tax holiday had caused significant price increases for certain goods.
“The most notable index affected by the base-year effect in February 2026 was food purchased from restaurants, along with smaller impacts from alcoholic beverages and toys,” the agency’s report on the new data states.
The data release comes two days before the Bank of Canada’s upcoming interest rate announcement and follows weak employment data released last Friday.
Grocery price growth slowed to 4.1 percent year-over-year in February from 4.8 percent in January, led by beef. Prices for fresh or frozen beef were 13.9 percent higher than a year earlier, after rising 18.8 percent in January. In other words, beef remains significantly more expensive than a year ago, but the rate of increase has moderated.
Statistics Canada noted that grocery prices have risen by 30.1 percent since February 2021.
In a note to clients on Friday, CIBC economist Katherine Judge observed that core inflation measures, which exclude more volatile items, have remained broadly stable. This stability should allow the Bank of Canada (BoC) to “play down its concern around higher energy prices” caused by the conflict in Iran, Judge wrote — which could push the main inflation measure toward three percent in the coming months. Economists generally expect the BoC to hold interest rates steady at its announcement on Wednesday.
In February, lower energy prices continued to ease inflation. Gasoline prices were down 14.2 percent compared to a year earlier, while natural gas prices fell 17.1 percent.
On a monthly basis, the Consumer Price Index (CPI) increased by 0.5 percent in February. Seasonally adjusted, CPI rose 0.1 percent.
This story will be updated.
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
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