Rising energy prices pushed Canada’s annual inflation rate up to 2.5% in May, Statistics Canada reported today. In April, the annual rate was 1.6%.

“On average, gasoline prices were 30.3% higher in May 2004 compared with May 2003,” Statistics Canada said in a news release. “In the last month alone, they rose 13.6%.”

Excluding energy prices, the consumer price index was up 1.3% in May, a slight increase from the 1.2% rise in both March and April.

From April to May, the CPI rose 0.9%. That’s the largest monthly increase since May 2001. Again, gasoline prices were by far the most important contributor.

But when eight volatile components identified by the Bank of Canada are excluded, the core CPI rate rose just 1.5% from May 2003 to May 2004, down from 1.8% in April.

The moderate reading on core inflation could reduce pressure on the central bank to raise rates sharply in its next scheduled announcement Juy 20. Economists have forecast a quarter-point rise.