economists expect inflation to slow further in May, which would be a welcome advancement for the Bank of Canada after it lowered its key interest rate for the first time in four years.

Tomorrow's report on Tuesday from Statistics Canada will provide the first reading of inflation after the Bank of Canada cut its interest rate by a quarter percentage point on June 5, bringing the benchmark rate to 4.75 percent, and economists say the new data could pave the way for another cut in July

BMO and TD Bank expect the annual inflation rate in Canada to slow to 2.6 and 2.5 percent, respectively, a slight decrease from 2.7 percent in April.

After the interest rate announcement, Governor Tiff Macklem confirmed that the Bank of Canada has greater confidence that inflation is approaching its target of 2 percent, citing various indicators suggesting alleviation of price pressures

Economists say the incoming inflation data will have a significant impact on the pace of future interest rate cuts.

Looking ahead to the next interest rate announcement on July 24, James Orlando, the director of economics at TD Bank, noted that the next two inflation reports could pave the way for another rate cut.

Orlando said, "This would open the door to the possibility that the Bank of Canada decides to return to cutting interest rates."