OTTAWA - Economists say they found some encouraging signs in the latest inflation numbers but some warn the Bank of Canada might need a bit more convincing to cut its key interest rate next month.

The annual rate of inflation fell to 1.7 per cent in July, Statistics Canada said Tuesday, down from 1.9 per cent in June. The reading was a tenth of a percentage point below most economists' expectations.

A 16.1 per cent decline year-over-year in gas prices tied mainly to the removal of the consumer carbon price earlier this year fuelled the drop.

BMO chief economist Doug Porter said in an interview that the July consumer price index was a "relatively favourable report" despite some stubbornness at the grocery store and in housing.

July's consumer price index marks the first of two looks at

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