High fuel costs driving inflation in Canada

OTTAWA: Consumer prices in Canada soared 3.1 percent in June, compared with a year earlier, on surging gasoline prices, Statistics Canada said on Wednesday.

The increase in consumer inflation was the largest since September 2005 when hurricanes Katrina and Rita disrupted the oil market, and was sharply higher than the 2.2 percent rate in May, the government agency said.

Inflation excluding gasoline, which was up 26.9 percent over the previous 12 months, rose only 1.8 percent in June, it noted.

Mortgage interest costs, bakery products and air transportation also exerted strong upward pressure on the Consumer Price Index, with transatlantic flights posting the sharpest price increases due in part to premiums charged by carriers to cover higher kerosene prices, the agency said.