May 22, 2015 / 12:38 PM / 3 years ago

UPDATE 1-Canada April inflation at 0.8 pct, smallest gain in 1-1/2 yrs

OTTAWA, May 22 (Reuters) - Canada’s annual inflation rate cooled to 0.8 percent in April, making for the smallest increase since October 2013, due to cheaper energy, data from Statistics Canada showed on Friday.

That brought inflation below the lower end of the Bank of Canada’s 1 to 3 percent target range and fell short of economists’ forecasts for 1 percent.

Still, it was broadly in line with the central bank’s forecast that weaker energy prices could temporarily pull inflation down before the rate returns to 2.0 percent in 2016.

The core rate, which strips out volatile items and is closely watched by the bank, was firmer than the overall rate, edging down to 2.3 percent from 2.4 percent in March.

The energy index fell 13.5 percent, its biggest decrease since September 2009 due to lower prices for natural gas, gasoline and fuel oil.

Overall, prices rose in seven of the index’s eight main components, led by a 3.6 percent increase in the cost of food.

Transportation was the only major component to decline, falling 4.2 percent on the decline in gasoline prices.

On a monthly basis, overall consumer prices decreased 0.1 percent, while core rose 0.1 percent.

Reporting by Leah Schnurr; Editing by Randall Palmer and Bernadette Baum

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