Consumer prices in Canada rose just 1.1 per cent in January, compared to a year earlier, and analysts say prices will likely slide in the near future.

The 1.1 per cent increase is lower than the 1.2 per cent jump reported in December, reflecting price decreases for transportation items, which outweighed higher prices for food.

Economists had expected the consumer price index to rise 1.2 per cent in January.

"This is a softer than expected report, and suggests that not only is growing economic slack taking prices broadly lower, but also that the impact of the weaker Canadian dollar, which would otherwise push inflation higher, is not a formidable force," Charmaine Buskas, senior economics strategist at TD Securities, said Friday according to The Globe and Mail.

Statistics Canada, which issued the report Friday, said lower gasoline costs were the main factor preventing consumer prices from rising higher.

In January, gas prices dropped by 23.5 per cent, compared to the same time one year ago.

The cost of purchasing and leasing passenger vehicles - which fell by 8.2 per cent -- also helped push the index down.

Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said inflation will likely decline even more in the near future.

"With the economic downturn gathering force and commodity prices still reeling, inflation is poised to move decisively lower in the months ahead," Porter said in a Friday note.

Statistics Canada said some upward pressure on the all-items index came from higher food and shelter costs.

Food prices increased 7.3 per cent during the 12-month period to January, identical to the increase in December.

"Bakery and cereal products and fresh vegetables exerted upward pressure on the food index," the report said.

Shelter costs were also a significant upward contributor, rising 3.3 per cent in the 12 months to January.

Excluding food and energy, seasonally adjusted consumer prices decreased 0.2 per cent in January.

Here's the annual inflation rates in the provinces and territories (Previous month in brackets):

  • Newfoundland and Labrador 0.9 (1.2)
  • Prince Edward Island -0.1 (0.0)
  • Nova Scotia -0.1 (-0.2)
  • New Brunswick -0.5 (-0.6)
  • Quebec 0.5 (0.5)
  • Ontario 1.4 (1.5)
  • Manitoba 1.4 (1.9)
  • Saskatchewan 2.4 (2.6)
  • Alberta 1.2 (1.9)
  • British Columbia 1.4 (1.2)
  • Whitehorse, Yukon 2.4 (3.0)
  • Yellowknife, N.W.T. 2.7 (3.1)
  • Iqaluit, Nunavut 3.3 (3.4)