The overall drop marks a bigger monthly decline in inflation than analysts had expected, with consensus estimates published by BMO Economics indicating economists had anticipated a 1.8% reading last month.
That could give the Bank of Canada, which has left rates unchanged in its last four decisions, room to consider a reduction next month – although core measures remained stubbornly higher.
CPI-median rose to 3.1% while CPI-trim held steady at 3.0%. Both measures are closely watched by the central bank as preferred inflation gauges although another influential reading, the three-month moving average of the core rates, dipped to 2.43% from a prior 3.39%.
The Bank considered cutting rates at its last meeting on July 30 before ultimately opting against a reduction amid continuing concerns about the potential impact of ongoing trade tensions on the inflation outlook.
But while today’s news marks an encouraging sign that prices aren’t surging despite the continuing tariff chaos, the Bank will be closely watching another flurry of economic data between now and its September 17 decision.