Annual inflation rate jumps to 2.6% in February with tax holiday end

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OTTAWA — The annual rate of inflation accelerated sharply to 2.6 per cent in February as the federal government’s temporary tax break came to an end mid-month, Statistics Canada said Tuesday.

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That marks a sizeable jump from the 1.9 per cent increase seen in January, when Canadians saw GST and HST taken off a variety of household staples, common gifts and restaurant bills for the entire month.

February’s figures are well ahead of the consensus among economists polled by Reuters, which called for 2.2 per cent inflation in the month.

StatCan’s consumer price index is based on final prices paid by Canadians, meaning sales taxes are included in the agency’s calculations.

StatCan calculations show that, without the tax break in place for half a month, inflation would have come in at three per cent in February.

With the tax holiday still in place until Feb. 15, restaurant food prices were down 1.4 per cent year-over-year. But StatCan noted the reintroduction of the sales tax mid-month meant dining out was contributing the most to the acceleration in the overall price index in February.

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Alcoholic beverages, children’s clothing and toys were also included in the tax holiday and saw their costs drop similarly in February, but not as much as in January.

The consumer price index rose in every province last month, with Ontario and New Brunswick facing the fastest accelerations.

While gas prices were up 0.6 per cent from January to February, StatCan said the annual comparison showed a deceleration last month, helping to rein in the overall rise in inflation.

Elsewhere, Canadians were paying 18.8 per cent more on travel tours last month, with StatCan pointing to increased demand in travel to the United States over the President’s Day weekend to explain the price hikes.

The February inflation figures do not directly reflect the imposition of tariffs or counter-tariffs between Canada and the U.S., which went into effect after a series of deadlines and announcements in March.

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