Imagine inflation as the heartbeat of an economy—sometimes steady, sometimes erratic, always telling a story about where things are headed. In Canada, the headline Consumer Price Index (CPI) grabs the headlines, but it’s the core measures—CPI-trim, CPI-median, and the broader core CPI—that reveal the true rhythm beneath the noise. These aren’t just numbers on a chart; they’re the Bank of Canada’s secret weapons for navigating everything from grocery bills to mortgage rates. As we step into 2026, let’s dive into their latest trends, unpacking what drove the shifts in 2025 and what they signal for the year ahead.

The Headline Surge Meets Core Calm

Canada’s headline CPI climbed to 2.4% year-over-year in December 2025, up from 2.2% in November, marking the highest reading in three months. This uptick caught some off guard, fueled largely by base effects from the previous year’s GST holiday and a modest monthly dip of 0.2% in prices. Yet, zoom out to the full year, and the annual average CPI rose a more subdued 2.1%—the smallest yearly gain since 2020, though still part of a five-year climb totaling nearly 20%.

What makes this fascinating? While the headline number flickered higher, the core measures told a cooler tale. Excluding energy, CPI held steady at 2.6% for the year, matching 2024 levels. But the real stars—CPI-trim and CPI-median—decelerated for the third straight month. CPI-trim eased to 2.7% from 2.9%, while CPI-median slipped to 2.5% from 2.8%. These shifts aren’t random; they strip out volatile items like gasoline (which plunged 13.8% in December) and taxes, focusing on persistent pressures in everyday spending.

Think of it like filtering static from a radio signal. Headline CPI reacts to one-off shocks—energy swings, holiday tax breaks—but core metrics spotlight the underlying trend. Economists note that the average of core measures hovered around 2.65% year-over-year, with three-month annualized rates dipping to levels not seen since early 2024. This cooling vibe? It’s music to policymakers’ ears, suggesting inflation’s grip is loosening without dramatic intervention.

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Why Trim and Median Matter More Than Ever

CPI-trim and CPI-median aren’t your standard inflation gauges; they’re engineered for precision. CPI-trim excludes the least and most volatile components, smoothing out extremes to capture the middle ground of price changes. CPI-median, meanwhile, zeroes in on the middle value across all items—ignoring both the wild risers and fallers. Together with core CPI (often excluding food and energy), they form the Bank of Canada’s preferred trio for decision-making.

In 2025, these measures peaked earlier in the year before trending down. By December, their monthly gains were marginal—under 0.1% for median and trim—pushing three-month averages to a brisk 1.66%. This deceleration aligns with broader moderation: excluding food and energy, prices still edged up 0.3% monthly, but the core quartet averaged just 0.14% month-over-month. It’s a sign that sticky inflation in areas like travel services and airfares is being offset by softer moves elsewhere.

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Looking back, core inflation had surged above 6% in 2022 before easing into 2023. Now, at levels closer to the 2% target, they’re whispering stability rather than alarm. One analyst quipped that this “mild core news” counters headline surprises, reducing odds of rate hikes and eve