Statistics Canada says the country's inflation rate fell to 3.4% in May – the lowest it's been since June 2021.
The federal agency says the slowdown was largely due to lower gasoline prices compared with a year ago.
The slowdown in the headline rate comes after inflation ticked up slightly in April to 4.4%, setting off some alarm bells at the Bank of Canada.
Forecasters were widely anticipating a sharp decline in inflation this year, as price increases slow compared to the rapid run-up in the first half of 2022.
The Bank of Canada will be paying close attention to today's report as it gears up for its next interest rate decision on July 12.