Canada’s annual inflation rate came in at its lowest rate in six months, Statistics Canada said today.

Consumer prices increased by 1.8% for February, slowing from January’s 2.2% rise, according to the federal agency.

StatsCan attributed February’s inflation slowdown to less upward pressure from gasoline prices coupled with falling car prices.

However, the main factor behind the increase in consumer prices for the month was still the steep prices that Canadians paid at the gasoline pumps. This is true for the last six consecutive months.

StatsCan said the 17.1% 12-month gain in gas prices in February was due more to the relatively low level of the gasoline price index last year than to any recent increases.

The core-price index (CPI), which excludes volatile items such as food and energy, was up 1.5% in February—a modest rise from January’s 1.4% growth rate.

The core rate is used by the Bank of Canada to monitor its inflation control target.

“While a bit higher than expected in February, the big picture is that Canadian inflation trends remain comfortably below 2% and comfortably within the Bank of Canada’s target range,” wrote BMO Capital Markets deputy chief economist Douglas Porter, in a morning note. “There may be less urgency to cut rates in Canada than stateside, but the Bank still has plenty of leeway to do what they see fit in the months ahead.”

Comparing month-to-month, consumer prices rose 0.4% in February, after a 0.2% decline from December 2007 to January, according to the StatsCan data.

Overall, while both inflation indices came in stronger than economists expected, TD Securities economics strategist Jacqui Douglas points out that a large part of the gains was due to seasonal factors. “Given the base effects from last year’s acceleration in core CPI, the year-over-year rate is likely going to remain pretty weak for the next couple of quarters, bottoming out at just over 1.0% in mid-2008,” she forecasted, in a morning commentary.