At Lendworth, we focus less on noise and more on what actually drives lending decisions, rates, and opportunity. And this inflation report does exactly that.
Headline Inflation Rose — Core Inflation Fell Again
Yes, consumer prices rose faster than expected in December. But the why matters.
The increase was largely the result of a base-year distortion tied to a temporary sales tax holiday implemented in late 2024 under the previous Liberal government led by Justin Trudeau. That one-time policy made year-over-year comparisons look hotter than reality.
Meanwhile, the measures that actually influence rate policy told a calmer story.
Canada’s core inflation gauges—CPI-median and CPI-trim—cooled for the third straight month, reaching their lowest levels since late 2024 according to Statistics Canada.
CPI-median fell to 2.5%, down from 2.8%
CPI-trim eased to 2.7%, down from 2.9%
That trend matters far more than the headline number.
Why the Bank of Canada Is Comfortable Holding Rates
Despite the uptick in headline inflation, the Bank of Canada has already signaled that its policy rate—currently 2.25%—is “about right” to keep inflation near its 2% target.
Markets agree. Rate traders are now pricing in stable interest rates through 2026, not hikes.
In other words:
This is not a re-inflation story.
It’s a normalization story.
What’s Actually Driving Prices Right Now
Some categories did push inflation higher in December:
Restaurant prices rose sharply due to the expiration of the prior tax break
Services inflation accelerated to 3.3%, reflecting wage and labor costs
Grocery prices climbed 5% year-over-year, despite being flat month-to-month
But these increases were partially offset by:
Gasoline prices, down 13.8% year-over-year
Slower growth in goods prices overall
Excluding food and energy, inflation sat at a manageable 2.5%—a level consistent with economic stability, not overheating.
What This Means for Borrowers in 2026
For Canadian homeowners and borrowers, this report reinforces three realities:
The rate shock is behind us
The era of aggressive tightening is over. Stability—not volatility—is the new baseline.
Banks are still conservative
Even with easing inflation, traditional lenders remain rigid on income, credit, and renewal rules.
Equity matters more than ever
Lending decisions in 2026 will continue to prioritize property value and loan-to-value ratios—not just paperwork.
This is exactly where alternative and private mortgage solutions continue to grow.
What This Means for Investors
For mortgage investors, slowing core inflation paired with steady rates is a powerful combination:
Predictable cash flows
Lower macro risk
Strong demand for private capital as banks pull back
At Lendworth, we structure mortgages conservatively, focusing on real asset value, location, and liquidity, not speculation. In an environment where inflation is cooling—but borrowing friction remains—private mortgages continue to offer stability when traditional markets hesitate.
The Bottom Line
Canada’s inflation story isn’t heating up again. It’s cooling—just unevenly.
The headline number grabbed attention, but the fundamentals point to rate stability, disciplined lending, and opportunity for borrowers and investors who understand the new rules.
In 2026, the smartest financial moves won’t come from reacting to headlines—they’ll come from understanding what’s actually changing behind them.
If your mortgage is renewing, your bank is stalling, or your equity is sitting idle, this is the environment where informed alternatives matter most.