The pace of inflation in Canada cooled last month, offering some hope the central bank will resume lowering interest rates to help revive a sluggish economy being held down by trade uncertainty.

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.

Canada’s inflation rate fell by slightly more than expected in July to 1.7 per cent, which economists say could pave the way for the Bank of Canada to resume cutting interest rates.