Current Market Outlook

Prediction markets are pricing in a high probability that Canada's monthly inflation rate for December 2025 will be at or below 0.0%. The leading contract, "Will Canada's monthly inflation increase by ≤0.0% in December?" is trading at approximately 80% on Polymarket. This price indicates the market sees an 80% chance of a flat or negative monthly CPI print, suggesting strong consensus that price pressures were effectively absent or deflationary for the month. With only $1,000 in total volume, this is a thinly traded market, meaning the current price could be more sensitive to new information or order flow.

Key Factors Driving the Odds

Two primary factors are likely driving this pessimistic inflation outlook. First, the Bank of Canada's sustained restrictive monetary policy throughout 2024 and 2025 would have been designed to crush demand-side inflation, with the lagged effects potentially culminating in a period of very low or negative monthly prints. Second, historical seasonal patterns and base effects play a role. Energy prices, particularly for gasoline, often see significant declines in December, which can drag the headline CPI figure down month-over-month. The market is likely anticipating that these typical seasonal declines, combined with broader disinflationary momentum from slowing economic activity, will result in a non-positive change.

What Could Change These Odds

The primary catalyst is the official Statistics Canada CPI report scheduled for release on January 19, 2026. The 80% probability leaves a 20% implied chance of a surprise upside print. This could materialize from unexpected volatility in core service prices, such as shelter costs, which have been stubbornly high. A sharper-than-forecast decline in the Canadian dollar, boosting import costs, could also provide an upside shock. Given the thin liquidity, any pre-release leaks, analyst forecast revisions, or major economic data in the days before the report could cause significant price swings in this market. The consensus view of ≤0.0% is strong but not absolute, leaving room for a data surprise against a backdrop of potentially fragile economic conditions.