October 21, 2016 / 12:52 PM / in a year

UPDATE 1-Canada annual inflation 1.3 pct in Sept, food price gains cool

(Adds details from report)

OTTAWA, Oct 21 (Reuters) - Canada’s annual inflation rate rose less than expected in September as the cost of gasoline fell, while food prices saw their smallest gain since 2000, data from Statistics Canada showed on Friday.

The annual inflation rate rose to 1.3 percent, though that was shy of forecasts for an increase to 1.5 percent. Annual core inflation, which strips out some volatile items and is watched by the Bank of Canada, held steady at 1.8 percent, as expected.

Food prices were up 0.1 percent compared to a year ago, making for the smallest annual gain since February 2000. The rising price of vegetables due to the drop in the Canadian dollar made headlines at the beginning of the year, but the cost of fresh vegetables was down 2.0 percent in September, the first year-over-year decline since January 2013.

Gasoline prices were down 3.2 percent, though the decline was less steep than the 11.5 percent annual drop that had been seen in August. Excluding gasoline, the consumer price index rose to 1.5 percent.

Nonetheless, overall inflation remained in the lower end of the Bank of Canada’s 1 to 3 percent target range. The central bank earlier this week lowered its economic forecasts, including its outlook for inflation.

Reporting by Leah Schnurr; Editing by Andrea Ricci

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