Canada’s annual inflation rate hit 2.2% in December, slightly higher than the 2% rate posted in November, Statistics Canada said today.

Higher gasoline prices were the main factor of the increase in the consumer price index last month. While gasoline prices are down from their peak of September 2005, pump prices increased 14.6% between December 2004 and December 2005.

Consumers also paid more for homeowners’ replacement cost and restaurant meals, but shelled out less money for computer equipment and supplies, and for fresh vegetables.

The core inflation rate, which factors out eight volatile components identified by the Bank of Canada, rose by 1.6% between December 2004 and December 2005, matching the increase in November.

The volatile items include fruits and vegetables, mortgage interest cost, natural gas, fuel oil, gasoline, inter-city transportation, and tobacco products.

The increase was within the 1 to 3% range that is the Bank of Canada’s stated inflation target.