February 19, 2016 / 1:41 PM / in 2 years

UPDATE 1-Canada annual inflation rate picks up to 2 percent in Jan

(Adds details from report)

OTTAWA, Feb 19 (Reuters) - Canada’s annual inflation rate accelerated in January to its highest since November 2014, lifted by food prices and the first increase in the cost of gasoline in over a year, Statistics Canada said on Friday.

Annual inflation was 2 percent, surpassing economists’ expectations for 1.7 percent, and bringing the rate up to the Bank of Canada’s 2 percent target.

After being suppressed by a drop in energy prices, gasoline prices were up 2.1 percent, the first annual increase since October 2014. Nonetheless, prices still fell 6 percent on a monthly basis.

Food costs rose 4 percent as consumers paid 18.2 percent more for fresh vegetables. The rise in food prices suggests consumers were seeing the impact of a weaker Canadian dollar, which has been hit hard by falling oil prices.

Overall, prices were higher in seven of the eight major components of the consumer price index. The clothing and footwear segment was the only component to decline, and was down an annual 0.3 percent.

The annual core inflation rate, which strips out the prices of some volatile items and is watched by the Bank of Canada, was also 2.0 percent, slightly higher than expected and up from 1.9 percent in the previous month.

Reporting by Leah Schnurr; Editing by Bernadette Baum

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