Price pressures eased more sharply than expected in August, bringing the annual inflation rate back to the Bank of Canada’s target for the first time in more than three years.

Annual inflation fell to 2 per cent, from 2.5 per cent in July, Statistics Canada reported Tuesday. That’s the slowest pace since February 2021.

The return to target represents a major milestone for the Bank of Canada, which was forced to jack up interest rates to quell the biggest outburst of inflation in a generation. The return of inflation to target will only make it easier for the central bank to continue cutting interest rates in the coming months.

The Bank of Canada has already lowered its policy rate by 0.75 percentage points since early June.