Canada’s annual inflation slipped to 2.5% in June from May’s 2.8% as prices for gasoline and natural gas slowed their steady climb last month, Statistics Canada said today.

The core inflation rate, which excludes volatile components like energy and cigarettes, dropped from 2% to 1.7%.

That’s well within the Bank of Canada’s 2% target, which suggests the central bank will refrain from hiking interest rates at its next policy meeting in September.

“So much for those who thought the Bank of Canada would still be hiking rates,” CIBC World Markets economist Avery Shenfeld wrote in a morning commentary.

On a yearly basis, higher gasoline prices were still the biggest factor in the 12-month rise in the inflation rate. Housing costs also rose, largely because of a 35% jump in the price of new houses in Alberta.

“Economic activity, spurred by the province’s oil and gas operations, had an impact on housing starts, exerting upward pressure on material and labour costs,” Statistics Canada said.

Alberta produced the highest provincial inflation rate at 3.7%.

On a month-over-month basis, the consumer price index fell 0.2% from May to June as clothing, cars and natural gas cost less. Fresh fruit and housing cost more.