Financial Post | Business

By David Ljunggren

OTTAWA — Canada’s annual inflation rate rose more than expected in January, boosted by higher energy and transportation prices, but the increase was not seen as strong enough to spur the Bank of Canada to raise interest rates this year.

The annual rate increased to 2.5% in January from 2.3% in December, Statistics Canada said on Friday. The year-over-year increase was slightly greater than the 2.3% predicted by economists.

The Bank of Canada, which set a target range of 1% to 3% for inflation, has made clear it will keep interest rates low for the time being. Most economists expect the next rate hike in early 2013.

“We are not seeing aggressive pressures one way or the other, so it just confirms the Bank of Canada’s very neutral stance at this point,” said Mark Chandler, head of fixed income and currency strategy at RBC Capital Markets.

The…

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