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A woman fuels her car at a gas station in Toronto on Jan. 5, 2015.

Fred Lum/The Globe and Mail

Canada's inflation rate held at the bottom of the central bank's target band in February as falling gasoline prices were countered by higher costs for home insurance and meat.

The consumer price index rose by 1.0 per cent for a second month in February, Statistics Canada said Friday from Ottawa. The core rate, which excludes eight volatile products, slowed to 2.1 per cent from 2.2 per cent. Both rates matched the median in Bloomberg economist forecasts.

The Bank of Canada says a drop in oil prices will slow the inflation rate to 0.5 per cent in the first quarter. Governor Stephen Poloz has said his surprise January interest-rate cut helped create "more balanced" risks for consumer price trends and bought time to assess the damage from cheaper oil.

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Gasoline prices fell 21.8 per cent in February from a year earlier, a trend that may not last with prices at the pump jumping 9.4 per cent from January, the most in almost eight years. Excluding gasoline, the 12-month inflation rate slowed to 2.2 per cent from 2.4 per cent.

The price of oil collapsed about 60 per cent from June to January as the Organization of Petroleum Exporting Countries maintained production and the U.S. pumped at the fastest pace in three decades. Crude oil is Canada's top export and the price drop has triggered layoffs and canceled investments from companies such as Talisman Energy Inc. and Cnooc Ltd.'s Nexen Energy.

The inflation report for February also showed that food costs rose 3.9 per cent as meat advanced by 12.4 per cent and fresh vegetables by 8.4 per cent. Home and mortgage insurance costs rose by 8.6 per cent. Automobile prices fell by 1.0 per cent, the first decline since May, 2013.

The Bank of Canada's January forecast was for inflation to slow to 0.3 per cent in the second quarter, and for core inflation to remain close to 2 per cent through next year. The central bank sets interest rates to keep inflation in the middle of a 1 per cent to 3 per cent band.

On a monthly basis, total inflation rose 0.9 per cent in February and the core rate rose 0.6 per cent. Economists surveyed by Bloomberg predicted that overall monthly prices would rise 0.8 per cent and the core rate would gain 0.6 per cent.

Seasonally adjusted inflation rose 0.2 per cent in February and the adjusted core rate increased 0.1 per cent.

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