OTTAWA -- The annual rate of inflation slowed in December as the pace of rising food prices decreased and the cost of air travel compared with a year earlier fell, Statistics Canada said.

The agency said Wednesday the consumer price index was up 0.7 per cent in December compared with a year earlier, after posting a year-over-year increase of 1.0 per cent in November.

Prices rose in six of the eight major components on a year-over-year basis in December.

Food prices posted a year-over-year increase of 1.1 per cent in December compared with 1.9 per cent in November as the cost of fresh vegetables rose 1.1 per cent compared with 4.6 per cent in November. Prices for fresh fruit fell 6.0 per cent year over year.

Transportation prices were down 0.6 per cent as air transportation prices fell 14.5 per cent.

"Inflation is muted in Canada and still very much bearing the scars of the health and economic crisis," TD Bank senior economist James Marple wrote in a report.

"As the worst point in the crisis moves further into the rear-view mirror, price growth will pick up. Driven by rising energy prices, the headline rate is likely to hit two per cent by the second quarter of this year."

Statistics Canada said gasoline prices in December were down 8.5 per cent compared with a year earlier, but up 3.3 per cent compared with November as oil prices rose.

Excluding gasoline, the annual pace of inflation in December was 1.0 per cent compared 1.3 per cent in November.

The average of Canada's three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 1.57 per cent for December, down from 1.67 per cent in November.

Here's what happened in the provinces (previous month in brackets):

  • Newfoundland and Labrador: 0.6 per cent (0.8)
  • Prince Edward Island: -0.1 per cent (-0.5)
  • Nova Scotia: 0.6 per cent (0.2)
  • New Brunswick: 0.4 per cent (-0.4)
  • Quebec: 0.8 per cent (0.8)
  • Ontario: 0.7 per cent (0.9)
  • Manitoba: 0.1 per cent (0.6)
  • Saskatchewan: 0.9 per cent (0.8)
  • Alberta: 0.8 per cent (1.3)
  • British Columbia: 0.8 per cent (1.1)

The agency also released rates for major cities, but cautioned that figures may have fluctuated widely because they are based on small statistical samples (previous month in brackets):

  • St. John's, N.L.: 0.9 per cent (1.3)
  • Charlottetown-Summerside: 0.0 per cent (-0.2)
  • Halifax: 0.9 per cent (0.6)
  • Saint John, N.B.: 1.0 per cent (-0.1)
  • Quebec City: 0.8 per cent (1.1)
  • Montreal: 1.0 per cent (1.1)
  • Ottawa: 1.4 per cent (1.8)
  • Toronto: 0.3 per cent (0.6)
  • Thunder Bay, Ont.: 1.1 per cent (1.6)
  • Winnipeg: 0.2 per cent (0.7)
  • Regina: 0.4 per cent (0.7)
  • Saskatoon: 1.1 per cent (1.0)
  • Edmonton: 0.7 per cent (1.2)
  • Calgary: 0.8 per cent (1.3)
  • Vancouver: 0.8 per cent (1.2)
  • Victoria: 1.6 per cent (2.0)
  • Whitehorse: 0.1 per cent (0.7)
  • Yellowknife: -1.4 per cent (-0.5)
  • Iqaluit: -0.8 per cent (0.0)

This report by The Canadian Press was first published Jan. 20, 2021