The Canadian Press

Canada’s inflation rate shot up last month as Statistics Canada’s consumer price index rose more than half-a-point to 1.9%, the largest increase in more than a year.

All the inflation indicators rose in January and all provinces experienced inflation, although Atlantic Canada had the biggest gains.

The Bank of Canada core index, which the central bank uses to gauge systemic inflation, rose to 2%. And on a monthly basis, prices gained 0.3% from December to January after falling the same amount the previous month.

The annual inflation rate has gone from minus 0.9% to a positive 1.9% in four months.

But economists, who had expected the inflation rate would rise in January, have said Bank of Canada governor Mark Carney is unlikely to read the sharp increase as an underlying trend that would cause him to raise interest rates before July.

That’s because Canada’s inflation story remains all about gasoline prices and is regarded as temporary — the aftermath of wild swings in world crude oil more than a year ago, when crude rose above US$147 a barrel in mid-2008 then fell precipitously in the following months.

At this time last year, oil prices were seeking a bottom as the global recession slashed demand.

Statistics Canada said the cost of filling your gasoline tank at the pump was 23.9% higher this January than a year ago.

Excluding the important energy component, the inflation rate looked a little more tame at 1.3%.

The wild swings will likely flatten out, the agency said, since “prices at the pump have been relatively stable since July 2009.”

Besides gasoline, the other main contributors to inflation last month came from car insurance, property taxes and eating out at restaurants.

Meanwhile, while the cost of mortgage interest, natural gas, women’s clothing and fresh vegetables fell.

But the key food component, which had been rising most of last year, has already come back to earth and advanced a meagre 1.4% in January, the smallest in almost two years.

In the current low-interest environment, the amount Canadians pay on interest on their home mortgages remains a major source of disinflation, falling 5.5% in January.

Property taxes, however, rose 4.3% and rent 1.4%.

Regionally, Statistics Canada said all provinces saw consumer prices increase last month, with Atlantic Canada experiencing the biggest gains ranging from 3.1% in Nova Scotia to 4% in Prince Edward Island.

The agency said gasoline prices were mostly responsible, with the year-over-year increases in Atlantic Canada’s inflation rate — with prices rising from 26.5% in Newfoundland and Labrador to 35.6% in New Brunswick.

British Columbia had the lowest annual inflation rate at 0.7%.