In October, Canada's annual inflation rate reportedly declined more than expected to 3.1%, mainly due to lower gasoline prices, and measures of core inflation fell to their lowest level in more than two years, according to Statistics Canada data released on Tuesday.
Analysts had forecast inflation to slow to 3.2% from 3.8% in September. On a month-on-month basis, the consumer price index rose by 0.1%, in line with forecasts.
This decline in headline inflation will likely reinforce investor predictions that the Bank of Canada (BoC) will begin to cut interest rates from a 22-year high of 5.00% in the first half of 2024.
Core inflation readings fell slightly, with CPI-median declining to 3.6% and CPI-trim to 3.5%, the lowest since December 2021 and November 2021 respectively.
The central bank has kept interest rates on hold at its last two meetings, but indicated that it is still ready to raise if necessary. The bank predicts inflation will be around 3.5% until mid-2024, before declining to a target of 2% in late 2025.
The US dollar traded 0.15% lower against the Canadian currency after the CPI data was released.