Canada's annual inflation rate fell to 1.7% in April due to a drop in energy prices, but analysts said a rise in closely watched core measures would make life hard for the Bank of Canada as it ponders its next rate move.

Canada's inflation rate eased to 1.7 per cent in April, driven by a drop in prices after the federal government removed the consumer carbon tax, according to Statistics Canada. However, core inflation measures — which exclude volatile goods such as gas — all rose in April,

Signs that underlying inflation was picking up in April put the Bank of Canada in a tricky position ahead of its June interest rate decision, with some economists arguing a second straight pause is now more likely.