January 22, 2026
SUMMARY
Ontario’s inflation remained within the Bank of Canada’s target range in December 2025, with food prices driving recent increases while transportation and shelter costs eased. Annual inflation for 2025 declined compared to 2024, supported by falling gasoline prices and softer rental markets.
ONTARIO’S CONSUMER PRICE INDEX
According to the latest Consumer Price Index (CPI) data, inflation in Ontario stood at 2.1% year over year in December 2025, remaining within the Bank of Canada’s target range. This marked a modest increase from 1.9% in November. Inflation excluding food and energy was stable at 2.1%.
At the national level, Canada’s CPI rose to 2.4%, up from 2.2% in the previous month. Market consensus suggests that interest rates are unlikely to change at the upcoming policy meeting next week, with the benchmark rate expected to remain at 2.25%.
INFLATION BY COMPONENT
Food inflation was a key driver in December, rising to 7.5%, which is 3.4 percentage points higher than in November. This increase is widely attributed to base effects related to last year’s GST and HST holidays.
Transportation prices declined by 1.1%, compared to a 0.3% increase in the prior month, largely reflecting a significant drop in gasoline prices over the year. Shelter costs also eased, mainly due to lower rents across Ontario. Rent inflation, which reached about 7% at this time last year, has now roughly halved as demand has softened.
An exception to this trend was Thunder Bay, where shelter inflation rose sharply by 2 percentage points. This was driven by a substantial increase in rent inflation, which climbed from 1.5% in November to 7.9% in December.
AVERAGE ANNUAL INFLATION IN 2025
Statistics Canada also released average annual inflation figures for 2025. Overall CPI inflation averaged 1.9%, down from 2.4% in 2024. Excluding food and energy, prices rose by 2.4% in 2025, slightly lower than the 2.5% recorded in the previous year.
The decline in inflation was primarily driven by shelter and transportation. Gasoline prices fell by an average of 10.7% in 2025, reflecting lower global oil prices as well as the removal of federal and provincial carbon taxes.
____________________________
FOR MORE INFORMATION, CONTACT:
Gargi Bharti
Economic and Research Project Lead
Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210
gbharti@iciconstruction.com
