Canada annual inflation cools in December as gasoline prices pull back

[January 26, 2018]  OTTAWA (Reuters) - Canada's annual inflation rate dipped as expected in December as higher food costs were offset by a drop in gasoline prices, though underlying inflation continued to perk up, data from Statistics Canada showed on Friday.

he annual inflation rate was 1.9 percent last month, down from 2.1 percent in November and matching economists' forecasts. That left inflation slightly below the Bank of Canada's 2 percent target.

But two out of three of the central bank's measures of core inflation rose, including CPI common, which increased to 1.6 percent from 1.5 percent. The central bank says it is the best gauge of the economy's underperformance.

Food prices rose 2 percent from a year earlier as consumers paid more for food purchased at stores, particularly fresh vegetables.

The cost of gasoline moderated, with prices up 12.2 percent after the previous month's annual 19.6 percent surge.

The household operations segment also weighed on inflation, down 0.3 percent due to a drop in the cost of telephone services. It was the only one of the consumer price index's eight major component to decline.

(Reporting by Leah Schnurr; Editing by Bernadette Baum)

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