The inflation rate slowed to 3.1 per cent on a year-over-year basis, down from 3.8 per cent in September, as the price of gasoline fell, Statistics Canada said Tuesday.

The agency said the price drivers paid for gasoline in October fell 7.8 per cent from a year earlier compared with a 7.5 per cent increase in September, driven partly by a spike in gasoline prices in October 2022 after OPEC announced production cuts.

Excluding gasoline, Statistics Canada says the consumer price index was up 3.6 per cent for October, following a 3.7 per cent increase for September.

Prices for goods were up 1.6 per cent, while prices for services were up 4.6 per cent, largely due to higher prices for travel tours, rent and property taxes and other special charges.

Bank of Montreal chief economist Douglas Porter said the inflation report drives home the point that there is no need for further rate hikes by the Bank of Canada, especially with the economy already struggling to grow at all and underlying inflation calming.

鈥淗owever, before the bank can even begin seriously considering rate relief, we鈥檒l need to see more evidence that services inflation is also moderating鈥攖hat could be at least another six months down the road,鈥� Porter wrote in a note to clients.

Statistics Canada said the largest contributors to inflation continued to be mortgage interest costs, food purchased from stores and rent.

Mortgage interest costs were up 30.5 per cent compared with a year ago, while the cost of rent was up 8.2 per cent.

While grocery prices rose faster than overall inflation, Statistics Canada said the pace continued to slow. Grocery prices were up 5.4 per cent year-over-year in October compared with a 5.8 per cent move higher in September.

The inflation report came ahead of the federal government鈥檚 fall economic update expected this afternoon.

The decline in inflation should be welcome news for the Bank of Canada as it looks for evidence of a sustained slowdown in consumer price growth.

The central bank opted to hold its key interest rate steady at five per cent at its last rate decision, but it has said it is prepared to raise rates again if needed to bring inflation under control.

Bank of Canada governor Tiff Macklem is scheduled to give a speech on Wednesday to the Saint John Region Chamber of Commerce on the high cost of inflation, while the central bank鈥檚 final interest rate decision for the year is set for Dec. 6.

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