Transportation claimed a bigger slice of Canadian consumer spending in 2025, jumping to 17.87% of the Consumer Price Index basket from 17.29% the previous year, according to Statistics Canada's analysis of the 2026 CPI basket update released June 15. The updated basket, which uses 2025 household expenditures to calculate inflation, shows Canadians redirected their spending toward vehicles and healthcare while pulling back on shelter costs, reflecting shifts in borrowing costs, carbon pricing, and consumer priorities. The changes mark the most significant recalibration of how Canada measures price changes since the agency introduced the 2025 basket a year ago.
The transportation component's growth came primarily from vehicle purchases, with the purchase of passenger vehicles rising to 6.67% of the basket from 6.23% in 2024. New passenger vehicle purchases increased to 4.20% while used vehicles climbed to 2.47%, coinciding with retail automobile sales that rose 2.7% in 2025. Passenger vehicle insurance premiums also took a larger share, jumping to 2.45% from 2.03%. Health and personal care expenditures rose 34 basis points to 5.40% in 2025, driven entirely by healthcare spending that increased from 2.51% to 2.83% as Canadians allocated more money to medicinal and pharmaceutical products. Meanwhile, shelter's basket share fell from 29.12% to 28.51% despite higher overall expenditures, as mortgage interest costs dropped to 5.23% from 5.65% following four Bank of Canada policy rate cuts in 2025. Gasoline's share declined to 3.30% from 3.71%, partly due to the removal of the consumer carbon levy on April 1, 2025, which had accounted for 17.6 cents per litre.
The report notes that "basket weight changes are a function of the expenditure growth within a given category, as well as the growth rate of all other expenditures in scope of the CPI." According to Statistics Canada, rent increased for the third consecutive year to 7.45% from 7.19% in 2024, offsetting mortgage declines within the shelter component. The agency found that meat's basket share fell for the fifth straight update to 1.74% in 2025, as price-adjusted expenditures for fresh or frozen beef declined amid prices that jumped 13.5% year-over-year. Travel tours saw one of the sharpest drops, falling 23 basis points to 1.01% as Canadian-resident trips abroad declined 16.7% in 2025, with return trips from the United States plummeting 25.4%.
These shifts reflect how the CPI's fixed-basket methodology captures changing consumer behavior when basket weights are updated annually. The report explains that a fixed-basket price index like the CPI can only account for spending shifts during these updates, making regular recalibration essential to maintaining representativeness. Lower interest rates freed up household budgets previously absorbed by mortgage payments, enabling increased vehicle purchases even as insurance costs climbed. The carbon levy removal directly reduced gasoline expenditures, shrinking its basket importance despite steady driving patterns. Health spending's rise suggests Canadians are directing more resources toward pharmaceutical products, possibly reflecting aging demographics or changing healthcare needs. Food purchased from restaurants grew slightly to 6.02%, supported by annual food service sales that totaled $101.4 billion in 2025, up 5.6% from 2024.
Statistics Canada emphasized that "the 2026 basket update using 2025 expenditures incorporates weight changes based on the most current and relevant expenditure data, ensuring the CPI remains as representative as possible of the price changes experienced by Canadians." The agency will continue exploring new expenditure data sources for future updates, working with price experts and international partners to align with best practices. For pension programs, tax deductions, and government payments indexed to the CPI, these weight adjustments mean transportation and healthcare price changes will now carry greater influence on overall inflation readings, while shelter's impact moderates slightly despite remaining the largest single component at 28.51% of the basket.