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Cheaper gas prices keep February inflation rate low at 1.0%: StatsCan

Inflation increased at the same pace for the second month in a row as the consumer price index for February rose just 1.0 per cent compared with a year ago against the persistent headwinds of low gasoline prices, Statistics Canada said Friday.

The agency found cheaper gas once again played a big role in keeping inflation low as items in almost every category climbed.

The report said gasoline prices fell 21.8 per cent in February compared with the previous year, while fuel oil tumbled 23.4 per cent.

To demonstrate the inflation-dampening effect of lower pump prices, the report noted the inflation rate would have increased to 2.2 per cent on a year-over-year basis in February if gasoline had been excluded.

Still, Statistics Canada said February’s month-to-month gasoline price index registered a gain of 9.4 per cent compared to January. It said the increase followed seven straight monthly declines and was the largest gain since it rose by 12.4 per cent in March 2007.

The report found the higher cost for food and shelter led the upward pressure on prices. The biggest year-over-year price increases were detected for meat at 12.4 per cent and natural gas, which climbed by 10.8 per cent.

Statistics Canada also said inflation increased in six provinces in the 12 months leading up to February, with Ontario registering the biggest gain at 1.3 per cent.

On a seasonally-adjusted basis, the consumer price index was up 0.2 per cent in February, following decreases of 0.2 per cent in January, December and November.

Last month, Bank of Canada deputy governor Agathe Cote said in a speech that the turbulence of the oil slump could briefly push inflation into negative territory.

But Cote stressed that the central bank sees no reason for concern about outright deflation, which would only follow a sustained period of widespread price declines.

The bank tries to keep inflation close to an ideal two per cent target. It can adjust its benchmark overnight interest rate to help keep the economy close to that mark.

For February, the core inflation rate, which excludes some volatile items such as gasoline, slipped to 2.1 per cent, after increasing 2.2 per cent the previous month.

Statistics Canada also said Friday that total retail sales for January fell 1.7 per cent to $41.36 billion.