March 24, 2017 / 1:01 PM / 3 years ago

Canada's annual inflation rate dips to 2.0 percent in February

FILE PHOTO: Prices are displayed for oranges at a store in Atawapiskat, Ontario, December 17, 2011. REUTERS/Frank Gunn/Pool

OTTAWA (Reuters) - Canada’s annual inflation rate dipped to 2.0 percent in February from 2.1 percent in January, in part because consumers paid less for food and telephone services, Statistics Canada said on Friday.

Analysts in a Reuters poll had expected inflation to remain at 2.1 percent, above the Bank of Canada’s 2.0 percent target. The last time inflation hit the bank’s goal for two consecutive months was October and November 2014.

Consumers paid 2.3 percent less for food and 2.2 percent less for telephone services than in February 2016. But gasoline prices, the main driver for a recent spike in inflation, jumped 23.1 percent from a year earlier.

Once gasoline prices were stripped out, though, year-on-year inflation was only 1.3 percent.

All three new measures that the Bank of Canada established late last year showed core inflation below 2.0 percent. CPI common, which the central bank says is the best correlation to the output gap, was furthest away from target, remaining at 1.3 percent.

Earlier this month, the Bank of Canada said it was looking past what it called the temporary impact of higher energy prices, noting that muted underlying inflation continued to point to material excess capacity.

Reporting by David Ljunggren; Editing by Lisa Von Ahn

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