Higher gasoline prices and rising housing costs helped to push Canada’s annual inflation rate sharply higher in February, Statistics Canada reported today.

The February rate jumped to 2% — up 0.8 percentage points from January’s rate — and much higher than economists had expected.

February’s increase is the biggest one-month gain in the consumer price index since September 2005, when Hurricane Katrina led to big increases in gas pump prices.

Compared to last year, higher costs paid by consumers for owned accommodation remained the main source behind the 2% rise posted in February. Lower prices for natural gas dampened the gains.

Excluding energy, the 12-month change in the all-items index for February was 2.2%, faster than the 1.8% change in the previous month. This was the largest increase since June 2003.

The Bank of Canada’s core index climbed 2.4% in February following a 12-month rise of 2.1% in January. This index, which is used by the Bank to monitor the inflation-control target, has remained within the target range set by the Bank of Canada for several months.

Economists had expected the core rate to stay at 2.1%.

On a month-over-month basis, the all-items CPI rose 0.7% between January and February, after a slight 0.1% gain the previous month. This growth had not been seen since September 2005 (+0.9%). February’s increase was due primarily to higher gasoline prices.

In Ontario, gasoline prices rose 9.8% between January and February this year. Production interruption in some Ontario and Quebec refineries led to the temporary closure of some gas stations in those provinces because of the reduced availability of stock.

The monthly all-items index excluding energy climbed 0.6% between January and February 2007, following a 0.2% increase the previous month. A comparable monthly increase in this index was observed in November 2004.

On a monthly basis, the core index posted a 0.5% increase, compared to 0.1% in January.