New data from Statistics Canada shows that the country's annual inflation rate has slowed to a three-year low of 2.7 per cent in April. An economist says the data is "welcome news" for consumers and could signal the possibility for a interest rate cut as several core measures also continue to ease.

"This is absolutely good news," DT Cochrane, a senior economist with the Canadian Labour Congress, said on CTV News Channel on Tuesday. "We're continuing to see headline inflation within the range that the Bank of Canada is looking for."

Food prices, services and durable goods led the deceleration in headline inflation, according to Statistics Canada said, although the cooling was moderated by gasoline prices.

"They look at a measure called core (Consumer Price Index) and all three measures of core CPI are below 3 per cent for the first time."

Oddly enough, according to Cochrane, one of the things that's become a "major contributor" to Canada's overall inflation is now the country's higher interest rates – and he also warns that it could "hold inflation where it is."

"When you look at CPI, excluding shelter, which is the component most affected by interest rates, it's actually 1.1 per cent," Cochrane told CTV News Channel host Marcia MacMillan. "We're down below the bottom of the range."

How much will BoC cut rates this year?

Cochrane says the drop in an inflation is "definitely a mark in favour" for the possibility of a cut to Canada's key lending rate, however there are still a "lot of mixed signals" that bankers need to consider.

"Inflation in the U.S. has remained stubbornly high, so I think the Bank of Canada is going to be very cautious about making cuts."

Governor Tiff Macklem said the Bank of Canada is looking for a sustained period of cooling before lowering lending rates – this drop brings the annual inflation rate is now closer to that 2 per cent target.

"They tend to be quite hawkish on the upside and less so on the downside," Cochrane explained, "So I'm suspecting that they'll hold… even though we're overdue for a cut."

What to know if you have a mortgage

The biggest takeaway, according to Cochrane, is the increased likelihood for a rate cut as inflation rounds back into balance – badly needed for many homeowners who took out a "rock-bottom rate" mortgage.

"That's a difference of, you know, thousands of dollars a year on someone's mortgage when they have to renew," he said. "And we're coming up on a lot of renewals."

However, even if a rate cut does materialize, Cochrane says that many homeowners will likely be paying higher interest rates than they expected – but the savings will help people "hold onto their homes" while maintaining at least some disposable income.

"Every quarter of a per cent that we can cut is going to help those people."

On the housing front, Cochrane also warns that higher interest rates are also "undermining our need" for increased housing and that a rate cut is needed "sooner rather than later" to spur construction.

"It's making it more costly… to get the supply of the goods," he said, "Housing being the most prominent example of that." 

With files from Reuters