The pace of Canadian inflation slowed in March as higher food costs were offset by less expensive gasoline and automobiles, according to data released Friday by Statistics Canada.

Canadian consumer prices rose 1.2% in the 12 months to March 2009, down from the 1.4% increase in February. The upward pressure on the Consumer Price Index (CPI) came primarily from two sources: higher food and shelter costs.

Food prices, the largest factor, rose 7.9% during the 12-month period to March, on the heels of a 7.4% rise in February. March's increase was the largest since November 1986.

Shelter costs, the second largest factor, advanced at a 12-month rate of growth of 2.1% in March, after increasing 3.0% in February. While still a major contributor to consumer price growth, the 12-month change in the shelter price index has slowed since reaching a peak of 5.4% in July 2008.

Mitigating the overall increase in the CPI was a 6.2% decline in transportation costs. Year-over-year price drops for gasoline and for purchasing and leasing passenger vehicles were the primary downward contributors. Increasing prices for passenger vehicle insurance mitigated the overall 12-month drop in transportation costs.

Excluding gasoline, the CPI rose 2.4% in the 12 months to March. Overall, energy prices fell 11.2% during the same period, a larger drop than February's decline of 8.8%.

Seasonally adjusted monthly CPI falls

On a seasonally adjusted monthly basis, the CPI fell 0.3% from February to March, after increasing 0.4% from January to February. March's fall was due primarily to a 0.5% drop in the shelter price index. Tempering the fall was a 0.4% increase in prices for food and a 0.3% rise in transportation costs.

Excluding food and energy, the seasonally adjusted monthly CPI posted no growth from February to March, following a monthly rise of 0.3% from January to February.

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