Sharply higher gasoline prices pushed the national inflation rate to 2.2% in May, up from 1.7% in April, Statistics Canada announced today.

The increase was higher than expected. Private-sector economists were predicting an increase of 1.9% in the consumer price index compared with May 2007.

The Canadian dollar traded higher following the inflation rate announcement. The loonie was trading at US98.48¢, up 0.26 of a cent from Wednesday’s close.

Gasoline prices were up 15% in May compared with the same month last year. That was faster than the 12-month change of 11.6% posted in April. Gasoline prices increased across the country, rising the most in Quebec and Ontario, Statistics Canada said.

If the rise in gasoline prices were excluded, the 12-month growth in prices in May was 1.6%.

Higher 12-month price increases for May were also reported for mortgage costs, fuel oil, home maintenance and bakery products.

Lower prices were seen for fresh vegetables, vehicles, women’s clothing and computer equipment.

The Bank of Canada’s core index, which factors out eight volatile components and is used by the central bank to monitor the inflation control target, rose 1.5% between May 2007 and May 2008. That matches the 12-month increase posted in April. Lower prices for passenger vehicles dampened the upward pressure on the core index.

Separately, Statistics Canada reported wholesale sales rose for the second consecutive month in April, largely as a result of increased demand in the personal and household goods and the machinery and electronic equipment sectors.

Wholesalers sold $43.4 billion worth of goods and services in April for a gain of 1.4%, following a 0.7% increase in March.

In April, five of the seven wholesale sectors reported higher sales, with the only declines coming from the automotive and farm products sectors.

Despite the back-to-back monthly increases, overall wholesale sales have lost a bit of momentum since the second half of 2007 and are still slightly below the peak attained in March 2007. A significant dampening factor has been the slowdown in exports of motor vehicles and lumber.