Food Inflation I: Does Canada Really Have the Highest Food Inflation in the G7?

Food inflation is front of mind for many people right now. It is also very poorly understood. This is the first in an ongoing series aimed at unpacking some of the big-picture insights on food inflation, along with some of the nuances that matter if we want to get an accurate impression of what is happening. In this post, I look at the claim that Canada has the highest food inflation in the G7. I have seen political ads from Canada’s opposition parties and heard pundits make that claim. It struck me as odd and unlikely, so I decided to dig into it in a bit more detail. I will warn you in advance that I do go a bit into the weeds here, but I think it is worth doing if we want to understand food inflation better.

So, is the claim true?

The claim emerged early in 2026 and related to the December 2025 food inflation number, which was 6.2% (5.0% for food purchased from stores). Without context, Canada’s food inflation number for December 2025 was the highest in the G7. So the statement is factual. That said, it is worth looking at the underlying numbers to ask whether this reflects a sustained difference or a one-off. To do that, we need to look at why the number was higher and what was happening in the months around it. Based on what we know now, it is probably more accurate to say that Canada had, for a short period, the highest food inflation in the G7, but that it was largely due to the GST tax holiday at the end of 2024 and beginning of 2025.

In the end, Canada has generally been within the range of its G7 counterparts when it comes to food inflation over the past six years.

What the December spike actually tells us

Start with the pattern around December 2025. Food inflation was 3.4% in October 2025 and 4.2% in November. Then it jumped to 6.2% in December. January 2026 was even higher at 7.3%, before falling back to 5.4% in February and 4.0% in March.

What is interesting is that food inflation in the month of December itself was only 0.1%. The numbers presented in the media, and discussed earlier, are annual numbers that reflect price increases over the previous year. So we had a month with almost no price growth and, at the same time, a 50% increase in the annual inflation rate. That tells us something happened at the other end of the comparison period: lower prices from December 2024 dropped out of the calculation. If you are looking at a forward-moving annual series, an increase can occur because a very low number comes off the far end. That is what happened here. December 2024 marked the start of a two-month GST/HST holiday on food and other products in Canada. Statistics Canada uses prices including tax to calculate the food price index, so removing the tax effectively “lowered” prices for half of December 2024, all of January 2025, and half of February 2025. We can see these effects in products that were subject to tax before and after the holiday. Food purchased from restaurants fell 4.5% in December 2024. Restaurant meals are taxable. Confectionery products (think candy), which were taxable before the holiday, fell 7.2% in that month. Potato chips and other snack products also fell 4.4%. Don’t get me wrong—there were other inflationary pressures in that month, as there were in all G7 countries—but the main driver of the outlier number was the tax holiday. Food from restaurants represents approximately one-third of the “basket” used in Statistics Canada’s food price inflation calculations (more on the basket later).

The pattern created by the GST holiday—a dip followed by a short-term bump a year later—can be seen clearly in the Statistics Canada data. This strongly suggests that the short-term blip in food inflation from December 2025 through February 2026 was largely driven by the GST holiday. The change in food purchased in stores was more moderate because only a small proportion of food from stores is taxable.

Food inflation decreases Dec 24-Feb 25 due to the GST Holiday and similar but opposite bump 12 months later when echo occurs.

How does Canada compare with the rest of the G7?

To get a better sense of whether this is a real pattern or just a temporary distortion, it helps to zoom out and look at all of the G7 countries over several years. These data come from the OECD, which consolidates reports from individual countries. The image below shows food inflation across the G7 over the past five years. It is worth noting that the OECD appears to have recalibrated Canada’s 2025 number to account for the impact of the GST holiday and preserve a more accurate comparison. From 2021 to 2025, Canada was not the highest in any individual year. In fact, no country was consistently best or worst over that five-year period. Canada sits below the average for the seven countries over the past five years, although it is among the highest for 2025.

Food Inflation by Year for G7 Countries. Canada is below the long run average but towards the top at the end of 2025 - even with the OECD correction for the GST Holiday.

If we look at the most recent month (April 2026), which is fully beyond the impact of the GST holiday, Canada is the highest in the G7 at 3.5%, compared with 3.2% in the United States, 3.2% in Japan, 3.2% in the United Kingdom, 2.7% in Italy, 1.2% in Germany, and 1.2% in France. It is still too early to say whether this marks a sustained trend toward Canada having the highest food inflation rate, or whether it simply reflects seasonal variation that will wash out in the annual numbers.

Why Canada's food inflation may be running a bit hotter right now

So why might Canada be slightly higher than the others right now? The most likely culprit is beef. Despite significant price increases, Canadian beef consumption does not appear to have dropped much. Canada is a significant net exporter and, despite tight supplies, both exports and imports grew in 2025. The United States reduced exports and increased imports, which likely means its blended beef price (domestic and imported) was lower than Canada’s. That would help explain why beef prices increased more in Canada than in the United States. One possible reason is a stronger preference for domestic product in Canada than in the United States. There is at least some anecdotal evidence of that: McDonald’s Canada guarantees Canadian beef, while McDonald’s U.S. does not. That likely matters for restaurant food inflation as well.

Countries calculate food price inflation based on a basket of goods that reflects what consumers in each country actually buy. Beef matters more in Canada’s basket than it does in some other G7 countries. Beef consumption in Germany and the United Kingdom is less than half of Canada’s, so changes in beef prices will have less impact on their food inflation numbers even if prices go up by the same amount. Coffee is similar. Canadians consume approximately 50% more coffee than Americans do, so the significant increase in coffee prices in 2025 will have had a larger effect on Canadian food inflation than on that of some other countries.

In the end, Canada has generally been within the range of its G7 counterparts when it comes to food inflation over the past six years. Canada is currently at the high end of the G7 range, and it will be worth watching to see whether that persists through 2026. The differences do not appear to be primarily policy-driven. Rather, they seem to reflect Canadian consumer preferences and the way those preferences shape the food basket.

Recommended citation format: von Massow, M, "Food Inflation I: Does Canada Really Have the Highest Food Inflation in the G7?" Food Focus Guelph (141), Department of Food, Agricultural and Resource Economics, University of Guelph, May 23, 2026.

Key Words: Food Prices, Food inflation, CPI, Canada, G7, inflation