Canada's inflation rate in January rises to 2.1%, fuelled by gas prices

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Canada's inflation rate in January rises to 2.1%, fuelled by gas prices

Higher gas and electricity prices drove up Saskatchewan's annual inflation rate to 1.6 per cent in January. Prices for food purchased from restaurants were up 2.3% year over year in January, matching the gain in December.

The report shows a pick-up in energy prices is sparking inflation, even at a time when the economy seems to be awash in excess capacity. Gas prices in Alberta climbed 33.9 per cent last month, a gain that Statistics Canada says was partly attributable to a new carbon levy in the province.

In Alberta, the annual inflation rate hit 2.5 per cent last month after an increase of one per cent in December.

Ontario has also introduced a new cap and trade system, but it's unclear if that has begun to flow through to prices. It said gasoline prices were up 20.6 per cent from a year earlier, the biggest increase since September, 2011.

Excluding gasoline costs, the national inflation rate in January was 1.5 per cent.

Overall, a consensus of economists had predicted 1.6 per cent inflation for January, according to Thomson Reuters.

Retail sales in Alberta have now risen for five consecutive months.

The data show a surge in gasoline prices was one of the main contributors to the increase in living costs.

As far as the Bank of Canada underlying inflation measures are concerned, the CPI-common index rose 1.3% on the year from 1.4% previously while the CPI-median index was unchanged at 1.9% and the CPI trimmed-mean rate increased to 1.7% from 1.6%.

Manitoba's annual inflation rate jumped above two per cent last month as higher gasoline prices helped push up the cost of living here and elsewhere in Canada.

Consumers paid 2.4 per cent more for shelter while food prices slipped by 2.1 per cent from January 2016. Fresh vegetables dropped a whopping 17.3 per cent year-over-year.

Nationally, Canada's inflation rate also rose to the highest in more than two years to 2.1 per cent. There was an offsetting increase in seven regions by a major loss in Alberta.

Year-over-year, the purchase of passenger vehicles index rose more in January (3.8%) than in December (2.6%).

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