July's inflation rate, the highest 12-month increase since March 2003, comes as the annual price of gasoline jumped 28.6 per cent.

The overall inflation rate was also pushed higher by prices for natural gas and food. Natural gas prices saw an annual increase of 25 per cent in July while food prices were up 4.3 per cent.

"While headline inflation is now running at its fastest pace in more than five years, it is still near the bottom of the pack globally, and more than two points below the current U.S. pace," Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said Thursday in a note to clients.

With gasoline prices not included, consumer prices rose only 2.1 per cent in July.

The report also says lower prices to purchase and lease passenger vehicles helped to partially offset the impact of rising gas prices and the increased costs of transportation.

Prices for computer equipment and supplies also fell in July, dropping 12 per cent.

Meanwhile, the Bank of Canada's core inflation rate -- which excludes volatile items such as food and energy prices -- rose 1.5 per cent in July.

The three most eastern provinces had the highest consumer price increases. Prince Edward Island had a 5.3 per cent increase while Newfoundland and Labrador and Nova Scotia saw a 4.2 per cent jump.

"The rise in these energy components largely accounted for the growth in consumer prices posted in these provinces," says the report.

Here is the annual inflation rate for each province:

Newfoundland and Labrador 4.2
Prince Edward Island 5.3
Nova Scotia 4.2
New Brunswick 2.5
Québec 3.2
Ontario 3.6
Manitoba 2.6
Saskatchewan 3.2
Alberta 3.5
British Columbia 3.3

Source: CTV.ca News Staff