Canada's inflation rate falls to 2.5%

Drop paves way for interest rate cut

- NOJOUD AL MALLEES

Canada’s annual inflation rate fell to 2.5 per cent last month, matching economists’ forecasts and solidifying expectations for a third consecutive interest rate cut in September.

Tuesday’s consumer price index report says prices for travel tours, passenger vehicles and electricity helped drive the headline figure lower. Meanwhile, shelter costs are still the main driver of inflation as Canadians face significantly higher rents and mortgage payments.

The federal agency noted, however, that shelter price growth slowed last month to 5.7 per cent year-over-year, down from 6.2 per cent in June.