Canada's annual inflation rate hit a six-year high of 2.5% in June while May retail sales jumped.

Statistics Canada on Friday said rising gas prices had helped boost the annual inflation rate to its highest since it stood at 2.6% in February 2012. The market had forecast a rate of 2.4%.

The central bank, which says it will reduce stimulus as the economy strengthens, last week raised interest rates for the fourth time in a year and signaled more hikes to come. Its next fixed date rate announcement is on September 5.

Annual inflation has now exceeded the Bank of Canada's 2.0% target for a fifth straight month.

Two of the central bank's core inflation measures came in at 2.0%. CPI common, which the central bank says is the best gauge of the economy's underperformance, stayed unchanged at 1.9%.

Separately, Statscan said Canadian retail trade in May jumped 2.0%, its biggest increase in seven months, on sales at auto dealers and gasoline stations.

The healthy retail sales were stronger than the 1.1% median forecast.

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