Canada's August inflation rate was 1.7 per cent, a significant slowing from previous months' rates.

It was the first time since January that inflation in Canada moved below a 2 per cent increase.

The all-items price index hit 2.2 per cent in July.

Core inflation hit 2.2 per cent in August, marking a slight dip from July when Statistics Canada reported a 2.3 per cent rate.

CIBC chief economist Avery Shenfeld said the falling inflation rate is linked to oil prices, but it won't last.

Gasoline prices dropped 7.7 per cent per cent in August, calculated on an annual basis.

"Unfortunately that's temporary," Shenfeld told CTV's Canada AM, speaking of the slowing inflation rate.

"That's reflecting the falling gasoline prices. Since those numbers, of course, we know that oil prices have gone back up. That's going to take gasoline higher again, so we're going to get a temporary reprieve on those inflation numbers but don't cheer too loudly because that's going to be gone in a month or two."

Along with lower fuel prices, the cost of vehicles and fresh vegetable prices also helped cool inflation. Calculated on a month-to-month basis, that meant prices fell 0.3 per cent in July as compared to August.

Higher mortgage and housing costs -- which rose 6.1 per cent and 6 per cent -- also affected the inflation rate.

The jump in mortgage costs was the highest since July 1991.

With files from The Canadian Press