Canada's inflation rate slowed to an annual increase of 1.3 per cent in March, thanks in large part to gasoline prices that were much cheaper during the month than they were in the same time period a year earlier.

Statistics Canada reported Friday that six of the eight economic sectors the data agency monitors to come up with its cost of living figure were higher. The two that declined were the transportation index — which includes gasoline — and clothing and footwear, which got 0.4 per cent cheaper during the month.

Prices dropped 13.6 per cent at the pumps in March. That partly offset higher prices for shelter and food — particularly fresh fruit and vegetables. Due in part to the lower Canadian dollar, vegetables prices were up 14.9 per cent and fruit rose 11.3 per cent.

Bank of Montreal economist Doug Porter says the loonie, which was weak for much of March before later rebounding, is having an impact on the numbers.

"Just to cite a few examples, toys, sporting goods, shoes and autos all showed a bit of pop in the latest monthly, likely reflecting the pronounced Canadian dollar weakness at the start of the year," Porter said.

Core rate ticks higher

The 1.3-per-cent inflation rate was slightly higher than the 1.2 per cent that economists were expecting, according to data compiled by Bloomberg.

The inflation rate cooled in eight provinces during the month but increased in Alberta and British Columbia, the data agency said.

Prices for things like food and energy are notoriously volatile, which is why the Bank of Canada largely ignores them in setting its monetary policy. If those things are stripped out, the so-called "core" inflation rate actually increased during the month to 2.1 per cent, up from 1.9 per cent in February.

"Time will tell whether this was a one-month blip, or the start of a trend, but in our view, it is too early to get worried about the slight uptick in core inflation," TD economist Leslie Preston said. "Core inflation remains essentially on the Bank of Canada's target, and the slight uptick in March is unlikely to keep Poloz and company up at night."