Canada's inflation rate climbs; still below Bank of Canada target

OTTAWA (Reuters) - Canada's annual inflation rate climbed to 1.2 percent in December from 0.9 percent in November, largely due to higher gasoline prices, but remained well below the Bank of Canada's 2.0 percent target, Statistics Canada data indicated on Friday.

Market operators had predicted a 1.3 percent inflation rate in December. The last time Canada saw 2.0 percent annual inflation was in April 2012.

Statscan said gas prices, which rose by 4.7 percent in the 12 months to December following a 0.4 percent gain in the year to November, largely were responsible for the increase in the overall inflation rate.

The Bank of Canada's closely-watched annual core rate, which strips out the prices of volatile components such as gasoline and some foodstuffs, edged up to 1.3 percent in December from 1.1 percent in November.

Bank of Canada Governor Stephen Poloz said on Wednesday he was more worried about persistently low inflation than he had been three months ago. Market analysts said his comments paved the way for a possible interest rate cut if inflation and other data continued to disappoint.

(Reporting by David Ljunggren; Editing by Paul Simao)