It is likely that the inflation rate in Canada experienced another decline last month, according to economists who expect that the Bank of Canada will continue to lower interest rates throughout the fall.

The Canadian Statistical Agency is set to publish the Consumer Price Index report for July on Tuesday, and forecasters expect it to show a slowdown in inflation to 2.4 percent from 2.7 percent in June.

James Orlando, the director of economics at TD, said that despite upward pressures from gas and food prices, he still expects the annual rate to decline due to base year effects, which refer to how last year's price movements affect the overall inflation calculation.

He stated that this is happening against the backdrop of a really strong decline in the base effects (annual) from last July, when inflation rose significantly.

The noticeable slowdown in price growth this year has bolstered confidence among economists and the Bank of Canada that inflation will continue to decelerate in the coming months, giving the central bank the green light to continue reducing the benchmark interest rate.

Tiago Figueiredo, a macroeconomic strategist at Desjardins, said: "We will need to see something completely different from what we saw in this inflation reading to rule out any kind of interest rate cut in September."

He confirmed that Desjardins expects the annual inflation rate to drop to 2.5 percent in July.

The Bank of Canada, which has lowered the key interest rate in its last two meetings, has indicated that it will continue to lower interest rates as long as price growth continues to decelerate.

The central bank's shift to lowering interest rates comes amid a faltering economy, with businesses and consumers pulling back on spending.

At the same time, a chill has hit the job market, pushing the unemployment rate up to 6.4% in July.

Bank of Canada Governor Tiff Macklem said in his recent interest rate announcement that as inflation approaches its target of 2%, the central bank is increasingly considering the risks associated with keeping interest rates elevated for too long.

Macklem noted in the press conference held after the meeting on July 24: "The need for a recovery in growth was part of our decision to cut the interest rate today."

Forecasts now widely expect the central bank to cut the interest rate at every interest rate meeting this year. Assuming the bank cuts by a quarter point at each meeting, this would bring the key interest rate down to 3.75%.

Orlando stated: "There isn't much in the economy that makes us think inflation will rise again now. So I think this just reinforces expectations for continued rate cuts at the same pace of 25 basis points from meeting to meeting."

The annual inflation rate has remained within the Bank of Canada's target range of one to three percent since January, which is a welcome development after a historic surge in price growth.

The bank expects inflation to return to its 2 percent target next year.

The slowdown in inflation in Canada is part of a broader global trend that allows central banks to lower or consider lowering interest rates.

In the United States, annual inflation reached its lowest level in over three years in July, the latest sign that the worst price surge in four decades is fading and positioning the U.S. Federal Reserve for a possible interest rate cut in September.

The annual inflation rate in the United States is now 2.9 percent.

The European Central Bank began cutting interest rates in June, and the Bank of England executed its first rate cut earlier this month.