The annual inflation rate in Canada fell to 2.5 percent last month, which aligns with meteorologists' expectations as price pressures continue to ease.

A report from the Consumer Price Index released on Tuesday states that prices for travel fares, private vehicles, and electricity helped push the headline figure down.

Meanwhile, housing costs remain the main driver of inflation as Canadians face significantly higher rents and mortgage payments.

However, the federal agency noted that the growth of shelter prices slowed last month to 5.7 percent year-on-year, down from 6.2 percent in June.

July saw the slowest annual increase in the Consumer Price Index since March 2021, highlighting the significant progress made in combating high inflation.

As for grocery prices, which were once growing at a double-digit annual rate, they are now rising at a more modest pace. Last month, grocery prices increased by 2.1 percent from the previous year.

Nevertheless, some price pressures remain, particularly in the service production sectors.

Service prices rose by 4.4 percent from the previous year, a trend that economists say reflects strong wage growth.

However, in light of the overall slowdown in price growth, forecasters widely expect the Bank of Canada to continue lowering interest rates in successive meetings.

Bank of Canada Governor Tiff Macklem indicated that the bank is increasingly concerned about the risk of keeping interest rates too high for too long.

In the latest announcement on interest rates, Macklem stated that the board decided to lower the interest rate, partly to help the economy regain momentum.

The key interest rate now stands at 4.5 percent.

The central bank is set to make its next interest rate announcement on September 4.

In a separate context, Statistics Canada announced that the average after-tax household income in 2022 decreased compared to 2021, after adjusting for inflation, with youth being the most affected.

The agency stated that the average after-tax household income for Canadians was $60,800 in 2022, a 2.5 percent increase from 2021.

However, after adjusting for the annual inflation rate of 6.8 percent, the figure decreased by four percent from the previous year.

Statistics Canada confirmed that single-parent households with a parent under 25 years old experienced the largest decline, dropping by 15.1 percent in constant dollars to $24,690 in 2022.

Individuals under 25 who are not in a household listed in the census saw a decrease of 12.9 percent to $17,650 in 2022.

Couples under 25 experienced a nine percent decline to $45,070 in 2022.