Statistics Canada says the consumer price index was up 0.1 per cent compared with a year ago, as gasoline prices were down nearly 15 per cent.
The reading was down from a year-over-year increase of 0.7 per cent in June. The average economist estimate had been for a year-over-year increase of 0.5 per cent for July, according to financial data firm Refinitiv.
Excluding the drop in gasoline prices, the inflation barometer compared with a year ago was up 0.7 per cent for July compared with 1.2 per cent increase excluding gasoline for June.
The statistics agency says the slower pace of price growth was broad-based, spanning goods and services.
Statistics Canada says air travel prices fell in July by 8.6 per cent, the first year-over-year decline since December 2015.
It says the result was due to airlines offering incentives for people to travel again, including reduced fees, discounts and promotions even as many flights remained cancelled or suspended because of the pandemic.
The Bank of Canada forecast last month that annual inflation will be 0.6 per cent this year
It also outlined last month that the key interest rate would remain at 0.25 per cent until inflation hits the central bank’s two per cent target.