TORONTO - The loonie fell below parity with the U.S. dollar in pre-market trading Friday even as commodity prices bounced back slightly and a report showed Canada's rate of inflation rose slightly higher than expectations. The loonie lost 0.14 of a cent to 99.98 cents US in pre-market trading after closing nearly a full cent lower Thursday. Canada's annual inflation rate rose for the second consecutive month in February, as higher prices on gasoline and food pushed the cost of consumer goods in Canada up one notch to 2.6 per cent. As well, core inflation � the underlying increase in consumer goods, excluding volatile items such as energy and fresh foods � rose two notches to 2.3 per cent, above the Bank of Canada's two per cent target. "Canadian consumer prices were just a touch firmer than expected in February," RBC Dominion Securities wrote in a note. "The BoC’s most recent forecast for core CPI in Q2 (of two per cent) still looks achievable. At the margin, this is not the most important variable for the bank right now (see consumer debt loads and growth trajectory in Q1) and, hence, there was a muted reaction to the slightly firmer core price increase," the note said. May oil added 36 cents to US$105.71 a barrel, while gold moved $7.20 higher to US$1,649.70 an ounce. Copper prices rose three cents to US$3.80 a pound. Lingering concerns about the Chinese economy have sent investors to the greenback. On Thursday, a Chinese manufacturing index compiled by HSBC fell to 48.1 in March from 49.6 in February. Figures below 50 indicate that manufacturing is contracting. Earlier this week, soft Chinese housing data and a warning from miner BHP Billiton also stoked concerns about the outlook in the world's second-largest economy, which has shored up the global economy over the past few years.

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