Canada’s annual inflation rate slipped to 1.2% in December, down from the 2% annual rate seen in November, Statistics Canada said Friday.

The December increase in consumer prices was the smallest increase since January 2007 and was due to a sharp decline in the price of gasoline.

Statistics Canada said prices that consumers paid for gasoline in December were 25.8% below levels in the same month the year before.

“This was the largest drop since the inception of the gasoline price index in 1949 and followed a 14.4% drop in pump prices in November,” Statistics Canada said.

Prices were also lower for passenger vehicles, women’s clothing and fuel oil.

While gasoline prices were the main factor in the decline in the overall national inflation rate, food prices were higher. Food rose 7.3% during the 12-month period, following a 7.4% increase in November. Fresh vegetable prices were up by 26.9%, while bakery and cereal products were up by 12.4%.

Consumers in New Brunswick and Nova Scotia saw an outright drop in consumer prices in the 12 months to December.

In New Brunswick, average prices in December 2008 were 0.6% below levels in the same month a year earlier. In Nova Scotia, the 12-month decline was 0.2%.

Statistics Canada said it marked the first time since October 2006 that the annual price change in any province fell into negative territory.