Living in Canada got a lot more expensive last month as the accelerating price of gasoline and the emergence of food inflation pushed the rate of increase in Canada's consumer price index to more than 3 per cent for the first time in nearly three years.

Yesterday, Statistics Canada said the country's annual inflation rate jumped to 3.1 per cent in June from 2.2 per cent the previous month, the biggest one-month leap since September 2005.

From May, prices were 0.7 per cent higher.

As was the case in 2005 when hurricanes Katrina and Rita caused a spike in oil prices, energy costs fuelled inflation in June.

The cost of filling up at gasoline stations rose by 26.9 per cent from a year earlier, and by 5.8 per cent from May.

If not for gasoline, Canada's annual inflation rate would have stood at a tepid 1.8 per cent in June, the agency said.

As well, fuel oil and other fuels rose 49.3 per cent, the same pace as in May.

As had been predicted for several months, food price inflation made an appearance, with store-bought food rising 3 per cent on an annual basis.

The chief culprit in the rise in food prices continued to be baked goods, up 12.3 per cent, but there also were price hikes for other items such as lettuce, milk and butter.

Food inflation stood at 1.9 per cent in May.

And restaurant prices had the biggest runup since the GST was introduced in 1991, up 0.9 per cent from the previous month.

"The bottom line is that Canadians just aren't sheltered from forces we're seeing around the world on food, partly because the Canadian dollar is no longer rising and cutting into import prices," said economist Douglas Porter of BMO Capital Markets in an interview.

"Part of it is the incredible pressures on things like pasta, flour and bread."

Pasta products were 35.9 per cent costlier than 12 months earlier, while flour cost 44.5 per cent more and bread was on average 17.7 per cent more expensive.

But while food costs are forecast to rise further, consumers may have seen the worst of energy prices.

The cost of a barrel of crude oil has declined about $20 since spiking on July 11 at above $147 US, which Porter said could show up in lower overall inflation in the months ahead.

The Bank of Canada forecast last week that inflation would rise steadily through the second half of 2008 and peak at 4.3 per cent in the first quarter of 2009.

This estimate was based on oil remaining above $140 US a barrel.