Photo: The Canadian Press

OTTAWA — Canada’s annual inflation rate slowed last month, but economists are still expecting the Bank of Canada to hike its key interest rate next week.

In its latest consumer price index released Tuesday, Statistics Canada said the country’s annual inflation rate slowed to 6.3% in December. The deceleration came as the cost of groceries continued to soar and gas prices cooled.

Annual inflation reached a high of 8.1% in the summer and has been slowly decelerating since. In November, the annual inflation rate was 6.8%.

However, CIBC’s executive director of economics Karyne Charbonneau said people shouldn’t expect December’s inflation report to stop the Bank of Canada from raising interest rates.

“Inflation came in largely as expected, so don’t think it’s going to change their mind,” Charbonneau said.

The economist expects the strong December jobs report to push the central bank to raise its key rate by a quarter of a percentage point at its next rate announcement on Jan. 25.

Though headline inflation is cooling, consumers are still experiencing sticker shock at grocery stores. The federal agency said grocery prices were up 11% in December on an annual basis, a slight improvement from 11.4% in November.

Charbonneau said as agricultural prices have come down, economists were hoping to see that translate to a more noticeable slowdown in grocery prices, but that hasn’t happened yet.

“I think what’s going on here is that a lot of what we buy in stores is heavily transformed. And there’s been pressures all along the (supply) chain,” she said.

Meanwhile, Canadians saw some relief at the pump last month, paying 13.1% less compared with November. The federal agency said the price of crude oil dropped amid concerns of a slowing global economy.

December’s deceleration was also offset by increases in mortgage interest costs, clothing and footwear, and personal care supplies and equipment.