‘Data for Business’ is an effort of the Langley Chamber, in partnership with the Canadian Chamber’s Business Data Lab, to bring our members reports, stats, and analysis on economic and business data to help inform business and investment decisions. Read our latest update below:

Inflation eased to 1.8% in February, driven largely by temporary base-year effects rather than a meaningful decline in underlying price pressures. While core inflation and broader price momentum show signs of easing, rising gasoline prices linked to global uncertainty are expected to push inflation higher again in the coming months.

Summary
The Consumer Price Index measure of inflation rose 1.8% year over year in February, down from 2.3% in January.

A large part of this was due to what economists refer to as a “base-year effect.” This reflects how current prices compare to the same period last year. In February 2025, prices rose sharply as the GST break ended mid-month, particularly impacting items like restaurant meals. Because that temporary increase is no longer part of the year-over-year comparison, inflation appears lower this year—even though underlying price pressures have not eased as significantly.

Gasoline prices fell nearly 14% year over year in February, less than the 17% decline in January, providing a small positive contribution to headline inflation. However, on a monthly basis gasoline prices rose 3.6% as the conflict in Iran began in late February.

The Bank of Canada’s core inflation measures improved, with the average of CPI trim and CPI median easing to 2.3% from 2.5%. Inflation momentum, measured by the three month annualized growth rate, has slowed to just 1%, reinforcing that inflationary pressures are easing.

Inflation slowed in all provinces, with Ontario and Atlantic Canada experiencing the largest impact from the GST break.

Implications
Gasoline prices have risen about 30 cents per litre since December due to supply disruptions and heightened uncertainty from the war in Iran. Prices at the pump are about $1.63 per litre, roughly similar to a year ago, but gasoline will likely become a net contributor to inflation next month, bringing headline inflation back above 2%.  It is yet to be seen how this supply disruption could affect the global outlook, key commodity prices, and Canada’s energy sector if the conflict lasts longer than expected.

Commentary:
“February is the dip before the spike. There are some encouraging details in the inflation data, with broad-based price pressures easing, particularly in services and in core measures that look past the distortions from last year’s GST/HST break. But the picture will not stay this calm for long. Rising tensions in Iran have pushed gasoline prices higher in recent weeks, and that’s likely to show up in the next inflation print.”  Andrew DiCapua, Economist, Canadian Chamber of Commerce