Canadian inflation rises to 0.7 per cent in May, below expectations

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OTTAWA - Statistics Canada says Canada's annual inflation rate rose slightly last month but remained tame at 0.7 per cent, which was below analyst expectations.

The agency says higher natural gas prices drove the increase from April's extremely low rate of 0.4 per cent.

The Bank of Canada's core index rose 1.1 per cent in the 12 months to May, matching the increase in April and also less than expected.

Economists had predicted an overall annual rate of 0.9 per cent, with core inflation at 1.2 per cent.

Statistics Canada reported last month that April's core inflation rate was 1.1 per cent, near the low end of the Bank of Canada's target range.

Alberta was the province with the biggest increase to its inflation rate, at 2.3 per cent.

In total, eight provinces had higher consumer prices while two saw declines over the past year.

Organizations: Statistics Canada, Bank of Canada

Geographic location: OTTAWA, Canada, Alberta

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