Dominique Lapointe, director of macro strategy at Manulife Investment Management, joins BNN Bloomberg to discuss Canadian CPI data.

Canada’s inflation rate rose more than expected in December as temporary tax effects lifted year-over-year comparisons, even as gasoline prices declined and broader price pressures continued to cool.

BNN Bloomberg spoke with Dominique Lapointe, director of macro strategy at Manulife Investment Management, about what the latest inflation data reveals about consumer pressures, hiring conditions and why the Bank of Canada is expected to remain on hold amid easing core inflation.

Key TakeawaysHeadline inflation accelerated to 2.4 per cent in December, driven largely by base effects from the end of a temporary GST/HST tax break rather than renewed price momentum.Core inflation measures continued to ease, with CPI-trim and CPI-median slowing to multi-year lows, signalling contained underlying inflation pressures.A sharp month-over-month jump in air transportation prices boosted the headline figure, but appeared linked to seasonal travel patterns and capacity constraints.Limited pricing power among businesses suggests firms are struggling to pass higher costs on to consumers, reinforcing signs of labour market softness.The Bank of Canada is expected to hold interest rates steady on Jan. 28, with trade uncertainty likely keeping policymakers on the sidelines through much of 2026.Dominique Lapointe, director of macro strategy at Manulife Investment Management Dominique Lapointe, director of macro strategy at Manulife Investment Management

Read the full transcripit below:

LINDSAY: Canada’s inflation rate accelerated by more than expected as a federal tax holiday at the end of 2024 pushed year-over-year price comparisons higher, offsetting falling gasoline costs. Let’s get more from Dominique Lapointe, director of macro strategy at Manulife Investment Management. Thanks for joining us. It’s good to have you.

DOMINIQUE: Good morning.

LINDSAY: Two-point-four per cent. What do you make of these numbers? That’s higher than what most economists were predicting.

DOMINIQUE: Yes. As you said, it’s harder to get a clear signal from this morning’s report because of the fading impact of last year’s GST rebate on food items and consumer products. That said, what we’ve been observing since the third quarter of last year appears to be continuing, which is rising food inflation in Canada, now above six per cent, and that is worrisome.

That is being offset by a downward trend in gasoline prices, which are lower than a year ago, as well as moderating shelter costs. For example, mortgage interest cost inflation is easing as people refinance at slightly lower rates than last year. Home prices in some markets are also moderating, which has a dampening effect on overall inflation.

So moving from 2.2 to 2.4 per cent, it’s still difficult to draw a strong signal, but there is nothing in this report that suggests inflation pressures are becoming too hot.

LINDSAY: That’s what I was going to ask you, so that’s good to know. You also noted a surprising 35 per cent month-over-month spike in air transportation prices. Can you dig into that a bit? Why was that so surprising?

DOMINIQUE: Yes, it’s one of the strongest month-over-month increases we’ve seen in many years. To be clear, airfare prices are very volatile on a month-over-month basis. Sometimes they fall by 10 to 15 per cent at the national level, and sometimes they rise sharply, usually during the holiday period.

They do typically increase in December as people travel for Christmas and New Year’s, but this time the increase was larger than last year. We’re not entirely sure why. We do know that for some U.S.-bound travel, airlines reduced capacity, which may have created supply constraints, or travellers may have shifted to other destinations. Statistics Canada doesn’t provide that level of detail, but overall, while a December spike is normal, this year’s increase was unusually large.

LINDSAY: Going back to the broader picture, food prices at restaurants and grocery stores rose, while gasoline prices helped offset some of that pressure. Gasoline prices were lower amid an oversupply of oil. Do you expect gasoline prices to continue easing and help offset grocery inflation in the coming months?

DOMINIQUE: Slightly, yes. We do expect oil prices to moderate further this year, driven by somewhat stronger supply, assuming no major geopolitical disruptions, and relatively stable global demand. That combination should help keep a lid on gasoline prices in Canada.

LINDSAY: At 2.4 per cent, you’ve said there’s no reason to panic. You don’t believe the Bank of Canada will change course or cut interest rates any further at the start of this year. Is that right?

DOMINIQUE: Exactly. When you look beyond the headline number, categories such as health, personal care and recreation — which saw significant inflation between 2021 and mid-2024 — are no longer showing much price pressure.

What the Bank of Canada focuses on most closely are the core inflation measures, and those eased slightly this morning. They’re still above two per cent, and even above 2.5 per cent in some cases, but the moderation is a positive signal. It suggests there isn’t significant underlying price pressure across the economy.

I’d also point to the Business Outlook Survey released earlier today, which shows more firms reporting rising input costs than rising output prices. That indicates limited pricing power for Canadian businesses.

LINDSAY: And does that hurt hiring?

DOMINIQUE: It already does. Hiring across the economy is, at best, stabilizing. It’s good news that we’re not seeing the sharp deterioration we saw earlier in the year, but hiring intentions among both small and large businesses remain weak, and job vacancies are very low. Limited pricing power and softer sales volumes are both weighing on hiring decisions.

LINDSAY: Dominique, thanks very much for breaking down the numbers. I appreciate your time.

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This BNN Bloomberg summary and transcript of the Jan. 19, 2026 interview with Dominique Lapointe are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.