Statistics Canada also reported Friday that alcohol, tobacco and food prices led the increase in prices of certain goods.
The rate was a lower than what economists had been expecting.
As was the case in November, some major items — gasoline, automobiles and clothing — actually saw price declines from the previous month. Indeed, on a monthly basis, prices actually dropped overall by 0.6 per cent between November and December. But not enough to drag the annual rate into deflationary territory.
Alberta prices flat
Consumer prices rose in all provinces, except Alberta. Across the country, Nova Scotia had the highest annual inflation rate, at 1.8 per cent.
The Bank of Canada's core index, which strips out volatile items like food and energy, declined slightly to 1.1 per cent from 1.2. That's the rate the bank pays closer attention to in setting interest rate decisions. The bank likes to see the core rate at around two per cent.
For 2012 as a whole, the average inflation rate was 1.5 per cent, the agency said, well down from the 2.9 per cent rate in 2011, and 1.8 seen in 2010.
Since 1992, Canada's inflation rate has averaged around 1.8 per cent.