Breaking: Canadian inflation rose more than estimated in December
Bởi FXStreet Team
Ngày xuất bản: 19 Jan 2026 | Ngày chỉnh sửa: 19 Jan 2026
BÀI VIẾT PHỔ BIẾN
Canada’s inflation ticked a bit higher in December, with the Consumer Price Index (CPI) rising 2.4% YoY, slightly above what markets were looking for, after a 2.2% increase in November. On a monthly basis, prices dropped 0.2%.
Canada’s inflation ticked a bit higher in December, with the Consumer Price Index (CPI) rising 2.4% YoY, slightly above what markets were looking for, after a 2.2% increase in November. On a monthly basis, prices dropped 0.2%.
The Bank of Canada’s (BoC) core measure, which strips out the more volatile items like food and energy, rose 2.8% over the past year and deflated 0.4% vs. November.
Looking at the BoC’s other key inflation gauges, Common CPI came in at 2.8%, Trimmed CPI at 2.7%, and Median CPI at 2.5%. Together, they show that underlying price pressures are still fairly sticky.
According to the press release: “The year-over-year acceleration in the all-items CPI was driven by the temporary Goods and Services Tax (GST)/Harmonized Sales Tax (HST) break that began on December 14, 2024. This resulted in monthly declines for the exempt goods and services, which have now fallen out of the year-over-year movement, putting upward pressure on headline CPI growth. Moderating the acceleration in the headline CPI was a year-over-year decline in prices for gasoline in December. Excluding gasoline, the CPI rose 3.0% in December, following a 2.6% increase in November.”
Market reaction
The Canadian Dollar (CAD) gains impulse on Monday, prompting USD/CAD to trade with decent losses in the sub-1.3900 region in the wake of the release of Canadian inflation data.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.30% | -0.25% | -0.13% | -0.23% | -0.31% | -0.56% | -0.69% | |
| EUR | 0.30% | 0.04% | 0.18% | 0.07% | -0.01% | -0.27% | -0.41% | |
| GBP | 0.25% | -0.04% | 0.15% | 0.02% | -0.06% | -0.30% | -0.44% | |
| JPY | 0.13% | -0.18% | -0.15% | -0.13% | -0.20% | -0.45% | -0.58% | |
| CAD | 0.23% | -0.07% | -0.02% | 0.13% | -0.07% | -0.32% | -0.48% | |
| AUD | 0.31% | 0.01% | 0.06% | 0.20% | 0.07% | -0.26% | -0.40% | |
| NZD | 0.56% | 0.27% | 0.30% | 0.45% | 0.32% | 0.26% | -0.13% | |
| CHF | 0.69% | 0.41% | 0.44% | 0.58% | 0.48% | 0.40% | 0.13% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
This section below was published as a preview of the Canadian inflation report for December at 12:00 GMT.
- Canadian CPI is expected have grown 2.2% y-o-y for the third consecutive month in December
- Monthly inflation is seen contracting 0.3%, following a 0.1% uptick in November.
- These figures support the idea of a steady BoC monetary policy in the near-term.
Statistics Canada will publish December’s inflation figures on Monday. The numbers will give the Bank of Canada (BoC) a fresh read on consumer prices and are highly likely to provide the bank's Monetary Policy Committee with further reasons to stand pat at their January 28 monetary policy meeting.
The market consensus anticipates a steady 2.2% yearly growth in the headline Consumer Price Index (CPI), unchanged in the fourth quarter of the year. after a sudden jump to 2.4% in September.
Monthly inflation, on the other hand, is seen declining 0.3% in the last month of 2025. This would be the first negative reading since August,, and would confirm the steady deflationary pressures, following a 0.1% gain in November and a 0.2% gain in October.
When is the Canada CPI data due, and how could it affect USD/CAD?
Canada’s CPI data will be disclosed on Monday at 13:30 GMT. The final figures are unlikely to cause a long-term impact on USD/CAD volatility, unless there is a significant deviation from the market consensus.
Headline inflation is expected to grow at a steady pace for the third consecutive month. The potential impact of the monthly contraction, if confirmed, is likely to be offset by the high core inflation levels. The BoC CPI, which excludes the impact from seasonal food and energy prices, rose at a 2.9% yearly pace in October and November and will, most likely, remain well above the Bank of Canada’s 2% target rate for price stability in December, holding the Bank from cutting interest rates further.
The USD/CAD is trading lower on Monday, weighed by market concerns about Trump’s uncertain trade policies after announcing additional tariffs on Eurozone countries. The pair’s broader trend, however, remains bullish. The Dollar has rallied nearly 2% against its Canadian Counterpart since late December lows, and downside attempts remain limited so far.
Against this backdrop, the risk is on softer-than-expected Canadian inflation figures, which might provide the Dollar with additional support to retest the seven-week highs at 1.3930. A strong inflation report, on the contrary, might trigger speculation about a BoC rate hike in the mid-term, and trigger a deeper USD/CAD bearish correction. Key support, in that case, is at the 1.3650 area.
Bank of Canada FAQs
The Bank of Canada (BoC), based in Ottawa, is the institution that sets interest rates and manages monetary policy for Canada. It does so at eight scheduled meetings a year and ad hoc emergency meetings that are held as required. The BoC primary mandate is to maintain price stability, which means keeping inflation at between 1-3%. Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Canadian Dollar (CAD) and vice versa. Other tools used include quantitative easing and tightening.
In extreme situations, the Bank of Canada can enact a policy tool called Quantitative Easing. QE is the process by which the BoC prints Canadian Dollars for the purpose of buying assets – usually government or corporate bonds – from financial institutions. QE usually results in a weaker CAD. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The Bank of Canada used the measure during the Great Financial Crisis of 2009-11 when credit froze after banks lost faith in each other’s ability to repay debts.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Bank of Canada purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the BoC stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Canadian Dollar.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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