Gasoline prices drive Canada inflation

Transportation costs drove up Canadian consumer costs in December, as fuel prices started bouncing back from recent lows, the government statistical agency said Friday.

Inflation rose 1.5 percent year-over-year, Statistics Canada said in a statement, following a 1.2 percent gain in November.

The upward pricing was "a bit more subdued than expected," said CIBC Economics analyst Avery Shenfeld.

Economists had forecast a 1.8 percent hike. But lower overall food prices tempered inflation.

According to Statistics Canada, gasoline prices led the increase, up 5.5 percent in the 12 months to December.

Airline travel was also more expensive in the month.

Food prices, meanwhile, declined a third month in a row -- down 1.3 percent in December.

Canadians paid less for fresh fruit and vegetables, and cereals, but more for fish and seafood, sugar and confectionary, and restaurant meals in the month.

Canada has not experienced prolonged food deflation since the early 1990s.

Shenfeld said he expects food prices to rise later in the year.