OTTAWA, May 20 (Reuters) - Canada's annual inflation rate eased to 1.7% in April as energy prices dropped sharply after the removal of a federal consumer carbon tax, but core inflation edged up, Statistics Canada said on Tuesday.
Two of the three core measures of inflation, which are closely watched by the Bank of the Canada, hit 13-month highs on underlying price pressures.
Analysts had forecast the annual rate would ease to 1.6%, in April from 2.3% in March.
The Bank of Canada last month predicted it would fall to about 1.5%, mainly due to the removal of the carbon tax and lower crude prices.
Overall energy prices plunged 12.7% last month as gasoline prices fell by 18.1% from a year earlier while year-over-year prices for natural gas dropped 14.1%.
Consumers, though, paid 3.8% more for groceries than they had done a year previously, up from 3.2% in March. Year over year, prices for travel tours rose 6.7% in April.
On a month-by-month basis, inflation dipped by 0.1% compared to analysts' forecasts of a 0.2% drop.
The Canadian dollar strengthened 0.1% to C$1.3940 to the U.S. dollar, or 71.74 U.S. cents, after the data.
It is the penultimate major data release before the Bank of Canada's next scheduled interest rate decision on June 4. Statscan is due to release first quarter GDP figures on May 30.
The odds for a rate cut dipped to 48% from 65% before the release, currency swap market bets showed.
After seven consecutive cuts since last June the Bank held rates on April 16 while saying it would be ready to move decisively if needed to keep inflation under control.
The bank pays particular attention to the core measures of inflation, which strip out the prices of more volatile items and do not take into account the removal of the carbon tax.
CPI median, which shows the median inflation rate across CPI components, rose from 2.8% in March to 3.2% in April, the highest since March 2024.
CPI trim, which excludes upside and downside outliers, edged up from 2.9% to 3.1%, also a 13-month high.
Additional reporting by Fergal Smith in Toronto; Editing by Susan Fenton
