Temporary factors have muted inflation, but they’re starting to fade. Statistics Canada (StatCan) data show the Consumer Price Index (CPI) accelerated in December. Excluding gas sends the value soaring, hitting the Bank of Canada’s upper bound. One bright spot is the slowdown in shelter costs, but the distribution was uneven. Only homeowners are seeing slowing costs, while rents hit one of the highest levels on record.
Canadian Inflation Accelerates, Hits BoC Upper Limit Excluding Gas
Canadian headline CPI shows annual growth accelerating. CPI’s annual growth hit 2.4% in December, up from the 2.2% reported a month prior. The headline has been suppressed by gas prices in recent years, and last month was no exception. CPI excluding gasoline hit 3.0% annual growth, accelerating 0.4 percentage points from a month prior.
Food Inflation Was Already Running Hot, Base Effect Amplifies Impact
Canadian CPI: 12-Month Change For Components.
Source: StatCan; Better Dwelling.
Leading the way higher is food, where prices surged 6.2% higher from last year. The agency attributed the acceleration to the HST holiday in the last two weeks of 2024. It’s true to some degree, but November came in at 4.2% without a base effect. Food prices grew nearly 110% faster than the Bank of Canada’s 2% target rate, before the base effect. While the base effect amplified it, the reality is food was climbing out of range before.
Other notable drivers were household operations, furnishings, and equipment (+3.6% y/y) in December, up from 3.3% in November. The agency also notes 13.0% annual growth for telephone services was also one of the bigger inflation drivers last month.
Inflation Cools For Homeowners, Rents Make 4th-Biggest Jump Since 1988
Canadian CPI: Annual Change For Owned Accommodations (Homeowners) and Rents for December.
Source: StatCan; Better Dwelling.
Canadian housing inflation was one of the few areas to see slowing growth, but it may be optimistic. Shelter slowed to 2.1% annual growth in December, shedding 0.2 points from November. The inflation relief is far from evenly distributed amongst the haves (homeowners) and have-nots (renters).
Homeowners are seeing below target inflation, according to the agency’s numbers. Owned accommodations saw annual growth of just 1.3% in December, shedding 0.4 points from November. Driving this decline were the subcategories of mortgage interest (1.7% y/y), and water, fuel, and electricity (0.3%).
Renters weren’t so lucky, though the pain is starting to slow. Annual rent growth was 4.9% in December, accelerating from 4.7% in November. Despite the recent uptick, the annual rate is down significantly from the 7.1% recorded in December 2024—marking the second year of slowing year-end growth. However, last month still marked the fourth-largest growth for the month since 1988.
That doesn’t quite match the “falling rents” narrative in the media, does it? The disconnect comes down to measurement. Rental firms like rentals.ca are reporting asking rents for vacant units as a market tool. StatCan measures rents actually paid, measuring the cost of living rather than providing a market tool. Both have their uses, but they measure and mean very different things.
This is why it’s best to OWN your home. People used to talk up how cheap rents are in Montreal and now the cost of renting is higher than the cost of owning.
When you’re a tenant, you live at the whim of your landlord.
The problem here is some people can afford to rent and those are the ones that typically have in demand skills that can move to other regions.
But rent also includes people who can’t afford to buy and are stuck. As a result of rents overrunning natural increases, cities see a sharp erosion and local businesses suffer.
Then what’s the benefit of living in these cities?
LOL. Home prices climbed before the immigration surge due to low rates and speculative landlords… Then rents climbed afterwards following almost the exact same trend. Must be the immigrants.
… though rents are rising again despite the gov buying down mortgage rates for the public. Golly gee whiz, this is a mystery as to what’s happening!
Costs are certainly not easing for condo owners especially in older buildings being hit with aerial
Special assessments and maintenance fees because the flawed cpi for reserve funds was used instead of the more appropriate bcpi. Try swallowing yet another special assessments for window door replacements where the average bill is 68k per unit or even 52 k for a smaller unit and on a fixed income and bonding blame the board or owners blame the condo authority and ministry of public
Business and service delivery and procurement and how their silence distorts policy drafters awareness of the real cost of condo maintenance ownership and typical affordability stats use to bring relief to lower income households costs rage unabated in condoland and the cao remains silent
Are we still pretending that Canada uses real inflation numbers?