A Statistics Canada report on a hike in Canada's inflation rate helped propel the loonie upwards on the markets Wednesday. It closed the day at US101.62, up 0.79 of a cent.

The StatsCan report notes that increasing gas prices fuelled the hike in the inflation rate. In April, it rose for the first time in five months.

The Consumer Price Index (CPI), which measures the average prices of goods and services bought by a household, increased to 1.7 per cent in April, compared to 1.4 per cent in March.

The agency says that prices at the pump rose 11.6 per cent in April. Analysts don't expect them to drop significantly in coming months as oil prices continued an upward climb -- selling above the US$132 mark this week to set a new record.

The report notes that if fuel prices were left out of the equation, the inflation rate would have been 1.3 per cent in April.

April also saw an increase in the core inflation rate -- which excludes unstable items such as energy and fresh fruit and vegetables -- to 1.5 per cent from 1.3 per cent in March.

StatsCan also said that there are fewer incentives at car dealerships in April, which helped raise the core inflation rate.

TSX tumbles

While the loonie rose, the Toronto's S&P/TSX composite index fell below 15,000 points, one day after reaching a new high.

It tumbled 256.97 points to end the day at 14,790.37.

New York's Dow Jones industrial average also took a hit, falling 227.49 points to end at 12,601.19.

Meanwhile, the cost of maintaining a home increased 4.6 per cent and mortgage interest costs rose 8.7 per cent, although StatsCan said this was mainly due to higher prices for homes, not higher interest rates.

Bakery prices jumped sharply in April by 10.4 percent, the biggest jump in almost 30 years.

But there were a few notable price drops in April. Fresh vegetables were down 17.3 per cent, women's clothing, 6.7 per cent, and computer equipment and supplies, 14.4 per cent.

Also the cost of buying or leasing a car fell 6.6 per cent compared with April 2007, although this was not as significant a drop as in March, where prices fell 7.1 per cent over the previous year.

StatsCan noted that much of the price drop can be credited to the strength of the Canadian dollar compared to last year and the impact of a January's one percentage point cut to the GST.

Ontario's inflation rate was the lowest nationally at 1.3 per cent. Prices jumped the most in the Alberta and Saskatchewan, rising 3.2 per cent at the annualized rate in April.

The agency also reported that the composite leading indicator, which gauges future economic activity, increased by 0.1 per cent last month. There was no change to the indicator the month before.