UPDATE 2-Canada annual inflation rate jumps to 1.5 pct in January

Fri Feb 21, 2014 9:22am EST
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* Total inflation 1.5 pct on year, 0.3 pct on month

* Core inflation 1.4 pct on year, 0.2 pct on month

* Forecast: 1.3 pct on yr, 0.1 pct on month, for total and core

* Inflation jump lessens rate cut probability

By Randall Palmer

OTTAWA, Feb 21 (Reuters) - Canada's annual inflation rate unexpectedly jumped to 1.5 percent in January from 1.2 percent in December, reducing the likelihood of an interest rate cut by the disinflation-preoccupied Bank of Canada.

Statistics Canada also said on Friday the monthly rise in prices in January from December was 0.3 percent, again more than expected, after a decline of 0.2 percent in December. Core inflation, which excludes volatile items like fruit and gasoline, also came in higher than expected at 1.4 percent on an annual basis and 0.2 percent on a monthly basis.

The median forecasts in a Reuters survey of analysts for both total and core inflation was 1.3 percent on the year and 0.1 percent on the month. The last time inflation was as high as 1.5 percent was in June 2012.