UPDATE 1-Canada inflation rate rises in December as food costs surge

Fri Jan 22, 2016 8:43am EST
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(Adds details from report)

OTTAWA Jan 22 (Reuters) - Canada's annual inflation rate rose in December as food prices surged, Statistics Canada data showed on Friday, suggesting the impact from the lower Canadian dollar was being felt.

The annual inflation rate rose to 1.6 percent, shy of economists' expectations for an increase to 1.7 percent.

Core inflation, which strips out volatile items such as fruit and vegetables and is watched by the Bank of Canada, slipped to 1.9 percent from 2.0 percent, was below forecasts and at its lowest since July 2014.

Canadians paid 3.7 percent more for food compared to December a year ago. Prices for food purchased at stores were up 4.1 percent, with the acceleration mainly attributable to more expensive fresh fruit and vegetables.

With C$8 ($5.64) cauliflower making international headlines recently, consumers have been bracing for the impact of the depreciation of the Canadian dollar, which has been hit hard by falling oil prices.

Overall, prices were higher in all eight of the consumer price index's major components, including shelter, which rose 1.1 percent from a year earlier.

The transportation index, which includes gasoline, posted its first year-over-year increase since October 2014, gaining 0.6 percent as gasoline managed a smaller annual decrease.

($1=1.4182 Canadian)

(Reporting by Leah Schnurr; Editing by Jeffrey Benkoe)