A drop in gasoline prices pushed down the annual inflation rate in May to just 1.6% from 2.4% in April.

Statistics Canada reported prices at the gasoline pump were actually 3.1% cheaper last month compared with the same period one year ago.

The core rate of inflation, which is closely watched by the Bank of Canada, also fell slightly in May compared with the month before.

Core inflation, which excludes volatile energy and food items, slipped to 1.6% in May from 1.7% in April and 1.9% in March.

The central bank prefers the core inflation rate to hover around 2%.