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Canada’s inflation rate softened in July as the consumer price index increased 1.7% from a year earlier, down from June’s 1.9%, according to Statistics Canada. The slowdown was led by a 16.1% drop in gasoline prices, while food and shelter costs continued to rise. Underlying price pressures also moderated. Three-month annualised measures of core inflation, closely watched by the Bank of Canada, decelerated to 2.4% from 3.4%, although year-on-year readings for the CPI-trim and CPI-median metrics remain near 3%. The cooler data reinforced expectations that the Bank of Canada could begin cutting interest rates in the coming months. Swaps now assign a 39% chance of an easing at the 17 September policy meeting, up from 31% before the release, with markets heavily favouring a cut by October. Currency and bond markets reacted swiftly. The Canadian dollar slipped 0.4% to 1.3855 per US dollar, touching its weakest level since 1 August, while the 10-year government bond yield fell 4.4 basis points to 3.446%.