The annualized Consumer Price Index rose by 1.3% in December compared with December 2008, following a 1.0% increase in November over November 2008. December's increase was the largest since February 2009.        

The increase in December was mostly due to gasoline prices.  Prices at the pump continue to exert pressure on the CPI after an extended period in which they were the main contributors to year-over-year declines in consumer prices.  In December, gasoline prices were 25.6% higher than they were in December 2008.  This follows a 14.1% rise between November 2008 and November 2009.   December's increase was the largest since September 2008. 

Food prices rose 1.7% in the 12 months since December 2008, matching the increase in November and down from a 2.3% annual increase in October. While this was the 22^nd straight month that food prices rose, it was, however, the smallest annual rate of increase since April 2008.   Prices for dairy products and eggs increased 1.9% while prices for non-alcoholic beverages went up 4.8%.   Other major contributors were food purchased from restaurants, sugar and confectionery, lettuce, bakery products and cereal products.  Prices fell for fresh fruit, pre-cooked frozen food preparations and potatoes.

Costs associated with shelter fell 1.7% in December, identical to November's decline and following a 1.6% drop in October.  The decrease primarily reflected lower prices for natural gas (-31.2%) and mortgage interest rates.  The Mortgage Interest Cost Index, which measures the change in the interest portion on outstanding mortgage debt, was down 4.9% compared with December last year, following a 4.0% decrease in November.  This index had been slowing since reaching a peak of 9.0% in June 2008, reflecting the downward trend in mortgage interest rates and housing prices.  Also there was a  1.2% decrease in homeowners' replacement costs.  Increases in maintenance and repairs costs (+3.3%) and in property taxes (+4.3%) slowed the decline in the shelter index.     

Transportation exerted the most significant downward pressure on the CPI, increasing 4.7% in the 12 months to December 2009, caused by higher gasoline prices.  Prices for passenger vehicles were 3.3% lower than in December 2008.  

The annualized CPI was up in all provinces with New Brunswick and Prince Edward Island , both at +3.0% leading the way.  Consumer prices were up 2.1% in Quebec, driven by higher prices for gasoline and for food purchased from restaurants.  In Ontario, prices rose 1.2%.  The growth was due primarily to the rise in gasoline prices (+26.8%) and passenger vehicle insurance premiums (+11.8%).  Prices in Alberta rose 0.6% and in British Columbia were up 0.4%, with gasoline prices up 21.6% and 24.4% respectively. On the other hand, shelter costs fell 3.7% in Alberta and 3.1% in British Columbia, significantly more than the 1.7% decline posted at the national level.