Canada's annual inflation rate eased to 1.7% in July from 1.9% in the prior month as lower year-on-year gasoline prices kept the consumer price index low, data showed on Tuesday.

Economists say they found some encouraging signs in the latest inflation numbers but some warn the Bank of Canada might need a bit more convincing to cut its key interest rate next month.

Canada’s inflation rate fell to 1.7 per cent in July, slowing slightly more than expected and easing some fears about sticky price growth. Statistics Canada’s consumer price index report on Tuesday said the deceleration was led by a decline in gasoline prices, which reflected the removal of the consumer carbon price.