The annual inflation rate in Canada fell to 4.3 percent in March as rising mortgage interest costs were offset by falling energy prices.

Statistics Canada reported today, Tuesday, that inflation slowed from 5.2 percent in February and continued on a downward path expected to decline to 3 percent by mid-year.

The continued slowdown in inflation since last summer led to the annual rate dropping to its lowest level since August 2021.

The slowdown also comes as global price pressures ease and rising interest rates affect the economy.

But the slowdown has not brought much relief to homeowners with new mortgages or those renewing their mortgages at high interest rates, as mortgage interest costs rose at the fastest pace ever last month, up 26.4 percent from last year.

Grocery prices are still rising quickly, but at a slower pace, having increased by 9.7 percent year-on-year in March, down from 10.6 percent in February. Statistics Canada said the slowdown was driven by falling fruit and vegetable prices.

Also, the preferred measures of core inflation used by the Bank of Canada, which it uses to look at price volatility, declined in March.

Inflation in Canada is expected to continue slowing this year, but the Bank of Canada said it will not ease until inflation returns to its 2 percent target.

The central bank also indicated that interest rates may need to stay higher for longer to get there.

According to its latest forecast, the Bank of Canada expects inflation to return to its 2 percent target by the end of 2024.