Rising prices: 1)Food inflation spiked 7.3% in January. Here’s what’s driving the increase; 2)inflation expected to jump in January amid tax changes: economists; 3)Home insurers raise prices, rein in coverage as weather events worsen

1)Food inflation spiked 7.3% in January. Here’s what’s driving the increase

Courtesy Barrie360.com and Canadian Press

By Craig Lord, February 17, 2026

Statistics Canada reported an easing in the headline inflation rate Tuesday but a jump in the pace of food inflation amid tax changes and lingering pressures at the grocery store continue to put the squeeze on consumers.

StatCan said Tuesday that the annual rate of inflation edged down to 2.3 per cent in January. Economists had expected inflation to hold steady at 2.4 per cent.

The agency said gas prices were 16.7 per cent lower year-over-year in January, largely thanks to the end of the consumer carbon price in April. Shelter inflation — long a pain for households in Canada — also fell to its lowest level in nearly five years as rent pressures abate.

Those declines helped offset food inflation, which accelerated to 7.3 per cent annually in January from 6.2 per cent a month earlier.

TD senior economist Leslie Preston said that part of the food inflation increase is a statistical phenomenon, while other factors tied to past inflationary pressures are still working their way through the supply chain.

StatCan said a jump of 12.3 per cent in the cost of restaurant meals year-over-year drove the acceleration in food inflation last month.

That surge was mostly tied to the federal government’s “tax holiday” — a two-month break on the federal portion of sales tax on qualifying goods and services — taking full effect a year earlier.

January 2025 marked the only full month of Ottawa’s temporary tax reprieve on dining out and a variety of goods and services and annual comparisons are somewhat distorted as that tax is added back into the inflation calculations for January 2026.

Prices for alcohol, children’s clothes, toys and games also jumped year-over-year due to the “tax holiday” effect.

With February marking the final partial month for the temporary tax break in 2025, Preston said those factors will start to unwind from the inflation calculations.

Food inflation has been a hot topic on Parliament Hill.

Conservative Leader Pierre Poilievre posted on social media Tuesday pinning the blame for rising food prices on regulatory fees driving prices up across the supply chain. He wrote a letter to Prime Minister Mark Carney “demanding emergency reversals on Liberal policies before Canadians go hungry.”

Costs for food from the grocery store rose 4.8 per cent annually in January, slowing from a price hike of five per cent in December. StatCan said prices for fresh fruit fell 3.1 per cent in the month as stable growing seasons in producer regions eased prices for berries, oranges and melons.

But prices for household staples like coffee and beef are still facing double-digit increases — and Preston said that’s not a “tax holiday” effect.

She said much of today’s higher prices are related to the weaker Canadian dollar in early 2025 as well as Canada’s retaliatory tariffs on the United States, which targeted grocery products such as Florida orange juice. Both of those factors make it more expensive for importers to buy food or ingredients from outside the country.

While the Canadian dollar has recovered somewhat and Ottawa dropped the bulk of its U.S. counter-tariffs in September, Preston said impacts on the grocery supply chain tend to hit consumers with a lag.

An analysis from Bank of Canada senior economist Olga Bilyk released earlier this month showed a tight correlation between food inflation and increased supply chain costs after accounting for a six-month delay.

That means relief from the end of those cost pressures will also take time to show up on Canadians’ grocery bills.

“These things take time to show up at the retail level so we expect to increasingly see cooler grocery inflation over the year ahead,” Preston said.

Some of the factors affecting grocery store inflation in Canada are global, such as droughts from years’ past leading to smaller cattle herds and tougher growing conditions for coffee beans, Preston noted.

But even as commodity prices put pressure on grocery shelves across the world, in the United States, food prices rose 2.9 per cent in January.

Preston said that Canada tends to get hit harder than the United States — particularly in the winter months — because less fresh food is grown north of the border. That leaves Canada more vulnerable to import price impacts and currency fluctuations.

Bilyk, in her analysis, also pinned much of the blame for recent food inflation on rising import costs. Foods like coffee and chocolate are facing higher prices globally due to extreme weather and trade tariffs, she said.

StatCan’s January price report marks the Bank of Canada’s first look at inflation data since the central bank held its benchmark interest rate steady at 2.25 per cent last month.

Preston said that, overall, the data is showing that prices across the household basket are easing at a somewhat faster pace than TD expected.

She said the Bank of Canada would need to see a few more months in a row of inflation slowing at this pace if it were to consider any additional interest rate cuts.

“We’ll be watching closely over the next couple of months to see if this trend continues, but, if it does, we would expect the Bank of Canada to shift towards a bias towards cutting interest rates,” Preston said.

Financial market odds of an interest rate cut at the Bank of Canada’s next decision on March 18 stood at just over 10 per cent as of Tuesday afternoon, according to LSEG Data & Analytics.

BMO chief economist Doug Porter said in a note to clients Tuesday that progress on the central bank’s preferred core inflation metrics in January will be encouraging.

He said the bar for another rate cut is high as central bank officials warn there is little more monetary policy can do to support the economy through its trade-driven structural transition.

Porter also argued an eventual cut isn’t completely off the table.

“Even so, if inflation continues to decelerate, the bank could be in position to support the economy should growth truly struggle as it undergoes a structural shift,” he said.

The Bank of Canada will get another look at inflation dynamics for February before its next decision in March.

2)Food inflation expected to jump in January amid tax changes: economists

Courtesy Barrie360.com and Canadian Press

By Craig Lord, February 15, 2026

Economists expect tax changes from a year ago will result in a year-over-year surge in food prices when Statistics Canada reports January inflation figures later this week.

StatCan will publish its January consumer price index report on Tuesday, a day later than originally scheduled.

The agency recently adopted a Monday publishing schedule for the consumer price index but shifted the January release to account for a regional holiday in eight provinces.

A Reuters poll of economists expects the annual rate of inflation held steady at 2.4 per cent in January, according to LSEG Data & Analytics.

Some economists think the headline inflation figure will accelerate.

RBC assistant chief economist Nathan Janzen said in a note Friday that he thinks tax-related disruptions will push the annual inflation rate up to 2.6 per cent in January.

Starting mid-December 2024, the Liberal government waived the federal portion of the sales tax on dining out and a variety of common household goods and some grocery items for two months.

With January 2025 marking the only full calendar month benefiting from the tax change, January 2026 will see higher prices in comparison for restaurant meals and some grocery items, Janzen explained.

“Food price growth could spike above (seven per cent), driven by rising restaurant costs compared to tax-exempt levels a year ago,” he said in the note.

Desjardins also expects distortions from the tax holiday will drive inflation a tick higher to 2.5 per cent in January.

Randall Bartlett, Desjardins’ deputy chief economist, said that while January’s food inflation will be largely tied to mechanical tax changes, that’s not the whole story.

Rising costs for grocery staples such as coffee and beef are also driving movement in food inflation, he said.

Bartlett cited a report from the Bank of Canada earlier this month that pinned much of the blame for rising grocery prices on higher import costs, in part fuelled by a weaker Canadian dollar earlier this year.

He said the U.S. trade disruption is driving up costs across Canada’s food supply chain, and that’s being felt in grocery aisles.

“Ultimately, uncertainty and change that’s driven by policy often ends up costing consumers more. And we’re seeing that in the food inflation numbers,” Bartlett said.

Ongoing relief from the end of the consumer carbon price last April, meanwhile, will continue to take some steam out of gasoline costs and the overall inflation figures, Janzen said in his note.

Economists at Capital Economics said in a note previewing Tuesday’s inflation data that softness in shelter costs should also help keep a lid on January CPI.

New home price growth has been weak in recent months and the Bank of Canada’s interest rate cuts from the past year should feed into lower mortgage interest costs, Capital Economics noted.

The Bank of Canada will get one more look at inflation data for February after this week’s release before making its next interest rate decision on March 18.

The central bank held its benchmark interest rate steady at its first decision of the year in late January.

Governor Tiff Macklem said at the time that the central bank’s governing council remains satisfied with where the policy rate stands as trade uncertainty continues to roil the economy.

Even if the headline inflation rate ticks higher as Desjardins expects, Bartlett said it likely wouldn’t be cause for concern from the Bank of Canada. Recent shorter-term measures of the central bank’s preferred core inflation metrics have shown signs of easing, he said, and he expects little change in those underlying price pressures in January.

“I think that’s something that could be persistent going forward. So hopefully we’ll see some continued good news on that front when we see the January numbers,” Bartlett said.

3)Home insurers raise prices, rein in coverage as weather events worsen

Courtesy Barrie360.com

By Ian Bickis, Feb. 15, 2026

Canada’s home insurance safety net is starting to fray at the edges as the costs of extreme weather continue to rise.

While competition is still healthy, and the country has so far avoided the coverage deserts growing in the United States, insurers are paring back policies in a variety of ways to adapt.

Raising premiums above the rate of inflation — sometimes steeply above — has been a common response, but experts say insurers are also increasingly excluding coverage of some risks, raising deductibles, and reducing their exposure to higher risk areas.

As Morningstar DBRS said in a November report: “The Canadian market is showing early signs of coverage tightening.”

While insurers haven’t withdrawn from areas entirely, some have thinned their exposure.

“We’ve rebalanced in some of the higher severe weather regions,” said TD chief executive Raymond Chun during the bank’s most recent earnings call.

“Where we had a higher concentration in some of the high severe weather zones, we’ve moderated.”

The bank is aiming for growth in regions with lower catastrophic risk instead, said Chun.

Definity Financial Corp., which says it’s Canada’s fourth-largest property and casualty insurer after closing a $3.3-billion takeover of Travelers last month, has also taken steps to pull back in higher-risk areas.

Chief executive Rowan Saunders said on the company’s November analyst call that they had worked to churn the portfolio, shifting new business to less catastrophe-exposed areas and reducing concentration in areas of higher peril scores.

He said the heavy lifting on shifting away from higher risk is largely done, but it will be a continuing effort.

“That’s just ongoing good portfolio management.”

Pressure to rebalance portfolios rose after costs spiked in recent years from already elevated levels, most notably 2024’s record $9.4 billion in insured losses.

But it’s far from a one-off.

According to a report from TD, average personal property losses between 2020 and 2024 were nearly double the prior stretch, while the number of catastrophic weather events averaged 15 a year, up from around two per year in the 1980s.

“Growing insured personal property losses are placing considerable strain on Canada’s home insurance sector,” said economist Likeleli Seitlheko in the report.

In response to the costs, insurers are raising deductibles to upwards of $10,000 for perils like hail, reducing coverage, or simply not offering it for some risks such as flooding, he said.

“In worst case situations, insurance coverage is simply not available for certain perils,” said Seitlheko.

Flood coverage, which was only introduced in Canada about a decade ago, has been patchy, with limited availability in higher risk areas. According to Public Safety Canada, Quebec has the highest number of properties at risk of flooding, followed by Ontario and British Columbia.

The Insurance Bureau of Canada estimates that about 1.5 million households, or about 10 per cent, can’t get flood insurance, while for those who can, it can add as much as $15,000 a year to premiums.

But even that’s overestimating how many can get coverage, said David Nickerson, who studies property economics at Toronto Metropolitan University.

“The industry says that flood insurance is available to 90 per cent of Canadians. That’s a gross exaggeration. Maybe 50 per cent, effectively, because of the idiosyncratic nature and redlining of high-risk areas.”

Part of the problem is patchy and outdated data to know which areas are at risk, said Nickerson, which is why the federal government is spending hundreds of millions of dollars to upgrade flood maps.

While insurance companies have a variety of sources of information, they can also still get caught out with concentration risk, as TD did in the 2024 Calgary hailstorm, said Nickerson.

“They got pasted with that huge, huge loss, and so they withdrew to replenish their financial reserves.”

Alberta has been a focal point of losses, where events like the $3 billion hailstorm and $1.1 billion Jasper wildfire in 2024 led to industry operating costs exceeding premium revenues by nearly 20 per cent that year, according to the TD report.

Despite the challenges, the industry itself remains stable, said Nadja Dreff, sector lead of global insurance at Morningstar DBRS.

The huge losses in 2024 were like a stress test for the industry and showed they had done enough to prepare, though that preparation has largely meant raising prices, she said.

“When you’re looking at it from a consumer, especially personal insurance perspective, the story is not so good, right?” said Dreff.

“Because for insurance companies to weather these losses, well, it means they are increasing premiums on personal lines, and that has been the case. And we predicted to be again the case in 2026.”

Between 2021 and 2025, home insurance costs (lumped together with mortgage insurance) rose 31 per cent, according to Statistics Canada, outpacing overall inflation at 15 per cent.

Areas hit by elevated claims saw much higher increases over the five years, including an average of a 68 per cent increase in B.C. and 58 per cent increase in Alberta, said the TD report.

But with insurers needing to ensure financial stability amid rising costs, there’s no easy answers.

“Everybody is kind of doing the best they can, and consumers are sort of on the receiving end,” said Dreff.

“Really the only way out of this situation, is for society as a whole to invest in climate resilience.”

Building and repairing homes to be better ready for more extreme weather is what the Insurance Bureau of Canada is also pushing.

“We’ve got to put the brakes on worsening the problem and really take a serious approach to building a more resilient country,” said Liam McGuinty, IBC’s vice-president of federal affairs.

As Canada aims to ramp up housing construction, it’s important to not build homes in flood risk areas, while also building to prepare for risks like hail and wildfires, he said.

As it stands, trend lines point to increasing costs as climate change makes weather events more extreme, said McGuinty.

“We should be very concerned about that trend, and all those costs ultimately have to be borne somewhere, right? And ultimately it’s policyholders, it’s premium payers that bear that cost.”