Higher gasoline prices drove up Canada’s annual inflation rate to 2.5% in September, up sharply from 1.7% the month before.

That’s the country’s highest inflation rate since May 2006, Statistics Canada said today.

Prices at the gas pumps were 12.7% higher than they were in September of last year. That was because of a sudden drop in gas prices a year ago rather than any increase between August and September, StatsCan said.

The core rate of inflation, which excludes the most volatile items in the consumer price index, slipped to 2% from 2.2% in August. That’s right on the Bank of Canada’s target for core inflation and represents the lowest core rate in just over a year.

Higher mortgage interest costs also helped to drive the year-over-year rise in the cost of living. That helped to push the cost of ownership up by 4.8% in the past year. Homeowners’ replacement costs rose by 5.2%.

On a month-over-month basis, consumer prices rose by 0.2%, mainly because of higher prices for women’s clothing, new cars, and tuition fees.

That was partially offset by a drop in the cost of fresh fruit and vegetables in September.

Alberta again had the country’s highest inflation rate at 4.6%. But that was the lowest increase in Alberta’s consumer price index since the start of the year. An almost 30% drop in Alberta’s natural gas prices over the past year got most of the credit for the moderation in Alberta’s inflation.

Alberta was one of four provinces to register inflation rates higher than the national average. The others were New Brunswick (2.9%), Manitoba (2.8%) and Saskatchewan (3.8%).