Analysts had expected the headline inflation number to fall to 6.4% from 6.8% in November. Month-over-month, inflation was down 0.6%, again lower than analysts' forecast of a 0.5% fall.
Consumers paid 13.1% less at the pump in December compared with November, the largest monthly decline since April 2020, Statistics Canada said. On a yearly basis, prices for gasoline rose 3% in December after a 13.7% increase in November.
Excluding food and energy, prices rose 5.3% in December after a 5.4% rise in November.
December's headline figure is still more than three times the Bank of Canada's 2% target.
The bank has raised its benchmark interest rate at a record pace of 400 basis points in nine months to 4.25% and said a decision to raise rates further would be more data-dependent.
The Canadian Dollar strengthened to 1.34 per U.S. dollar, or 74.63 U.S. cents, after the data.
(Reporting by Ismail Shakil and Dale Smith in Ottawa)
