UPDATE 1-Canada inflation rate slows, cuts pressure to hike rates

Fri Dec 21, 2012 8:33am EST
 
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* November rate slows to 0.8 pct from 1.2 pct in October

* Gas prices post smaller year-over-year increases

OTTAWA, Dec 21 (Reuters) - Canada's annual inflation rate in November fell to a three-year low of 0.8 percent on a smaller year-over-year increase in gasoline prices and lower prices for cars, Statistics Canada said on Friday.

The rate is far below the Bank of Canada's 2.0 percent target and means the central bank is under no pressure to raise interest rates soon.

Analysts had expected annual inflation of 1.1 percent, down from the 1.2 percent recorded in October. The November rate was the lowest since the 0.1 percent recorded in October 2009.

Gasoline prices increased by just 0.4 percent in the 12 months to November compared to a 4.0 percent year-over-year advance in October.

Prices for passenger vehicles fell by 1.8 percent, which in part reflects changes in the way Statistics Canada calculates some data. The agency no longer incorporates prices for new cars for the upcoming year into the inflation data for November, when manufacturers traditionally launch new models.

The Bank of Canada's annual core inflation rate, which strips out the price of items such as gasoline and some foodstuffs, dropped to 1.2 percent from 1.3 percent in October.