Canada's annual inflation rate fell to 2% in August 2024, marking the lowest level since February 2021 and aligning with the Bank of Canada's inflation target. This decline from July's 2.5% was primarily driven by a reduction in gasoline prices, which dropped by 5.1%, alongside decreases in clothing and footwear costs. The Consumer Price Index (CPI) also deflated by 0.2% on a monthly basis, indicating a broader cooling of price pressures. Analysts had anticipated a slight reduction to 2.1%, highlighting a more favorable economic outlook than expected. As the central bank considers future monetary policy adjustments, market speculation suggests potential interest rate cuts may occur later this year. The easing inflation rates could provide the Bank of Canada with more room to maneuver in terms of policy, despite rising shelter costs continuing to exert pressure on the CPI.