By Julie Gordon
OTTAWA (Reuters) - Canada's annual inflation rate rose at a faster pace in January, edging slightly ahead of analyst expectations on higher prices for durable goods and gasoline, Statistics Canada said on Wednesday.
The inflation rate accelerated to 1.0%, up from a year-on-year increase of 0.7% in December, and beating analyst expectations of 0.9%.
Durable goods prices rose 1.7%, while gasoline prices were up 6.1% amid oil production cuts, though they remain 3.3% lower than January 2020 levels.
"In the next few months, with the run-up in oil prices in particular and other commodities, and when we compare ourselves to what happened a year ago, we are going to get some very big inflation numbers," said Doug Porter, chief economist at BMO Capital Markets.
"So I think this is just an opening salvo in terms of what we are about to see for headline inflation."
The Canadian dollar was trading 0.2% lower at 1.2717 to the greenback, or 78.63 U.S. cents, as the greenback broadly rallied.
Two of the three core measures of inflation moved in January, with all remaining below the Bank of Canada's 2% target. The common measure, which the Bank says is the best gauge of the economy's underperformance, was steady at 1.3%, while trim rose to 1.8% and median fell to 1.4%.
"I'd put more emphasis on a little bit weaker core inflation than the pop in the headline," said Derek Holt, vice president of Capital Markets Economics at Scotiabank.
"We know that we're getting towards the bottom of a cycle if we're not there already. (The Bank of Canada's) greater concern should be about inflation outlook."
The Bank of Canada has said it will keep its key rate at a record low 0.25% into 2023.
Statistics Canada noted that the rise in consumer prices occurred amid continuing economic uncertainty. Populous Ontario and Quebec were both under strict health restrictions in January as COVID-19 spread. Those restrictions are now being eased.