Canada's inflation rate dropped to 2.5% in July, down from 2.7% in June, according to Statistics Canada. The decline was driven by lower prices for travel, passenger vehicles, and electricity. Inflation pressures have eased throughout the year, keeping the annual rate below 3% since January. The Bank of Canada has responded to this trend by lowering its key interest rate in recent meetings, with Governor Tiff Macklem indicating that further rate cuts are likely if inflation continues to slow.