Consumer prices in Canada rose at the slowest pace since June, a reassuring sign for central bank policymakers that rates are now high enough to significantly cool inflation pressures.

The consumer price index increased 3.1 per cent in October from a year ago, following a 3.8 per cent increase in September, Statistics Canada reported Tuesday in Ottawa. That matched the median estimate in a Bloomberg survey of economists. The deceleration was largely a result of lower prices for gasoline, while the largest contributors to the increase remain mortgage interest cost, groceries and rent.

On a monthly basis, the index rose 0.1 per cent, matching expectations and following a 0.1 per cent decline in September.

Two key yearly inflation measures that are tracked closely by the Bank of Canada and filter out components with more volatile price fluctuations — the so-called trim and median core rates — decreased, averaging 3.6 per cent from an upwardly revised 3.8 per cent a month earlier. That also matched survey forecasts.

Another key measure, a three-month moving average of underlying price pressures, fell to an annualized pace of 2.96 per cent from 3.67 per cent a month earlier, according to Bloomberg calculations. It's an important metric because Bank of Canada Governor Governor Tiff Macklem has said policymakers are tracking it closely to understand inflation trends.

Tuesday's numbers extended September's progress in the fight against inflation. The data will give policymakers more confidence their previous rate hikes are working to slow the economy and inflation. Macklem and his officials held interest rates steady at 5 per cent for the second straight meeting last month.

This is the only inflation report before the Bank of Canada's next rate decision on Dec. 6, when the majority of economists in a Bloomberg survey expect the bank to keep borrowing costs unchanged again. With the Canadian economy already showing signs of stagnation and the rate of inflation expected to slow further, many economists say rate hikes are done for this cycle.

In its monetary policy report last month, the central bank said it expects the consumer price index to average about 3.5 per cent through mid-2024, but slashed gross domestic product growth forecasts because consumers are pulling back on demand. Policymakers now expect to hit the 2 per cent inflation target in the second half of 2025, pushed back from a previous forecast of mid-2025.

Macklem will give a speech on the cost of high inflation before the Saint John Region Chamber of Commerce in New Brunswick on Wednesday.

In October, goods inflation decelerated to 1.6 per cent, led by lower prices at the pump. Prices for gasoline dropped 7.8 per cent from a year ago after rising 7.5 per cent a month earlier, while grocery prices continued their trend of slower year-over-year growth, with a 5.4 per cent increase following a 5.8 per cent gain in September.

But services inflation rose to 4.6 per cent, faster than the 3.9 per cent pace in September and putting upward pressure on consumer prices, largely driven by higher prices for travel, rent and property taxes. Prices for travel tours rose 11.3 per cent from a year ago, after a decline of 2.2 per cent in September, with faster price growth largely driven by travel to US destinations.

Canadians continued to feel the impact of rising rent prices, which rose 8.2 per cent from a year ago, compared with 7.3 per cent in September. That increase reflected acceleration across most provinces, with the largest gains seen in Nova Scotia and Alberta where rent prices rose 14.6 per cent and 9.9 per cent, respectively.

Property taxes and other special charges, priced annually in October, rose 4.9 per cent from a year ago. That's the largest increase since October 1992, with homeowners paying more in nearly all provinces as municipalities required larger budgets to cover rising costs. Manitoba is the only province where property taxes declined.

Regionally, prices increased at a slower pace from a year ago compared with September in all 10 Canadian provinces.