The Consumer Price Index (CPI) rose 3.1 per cent on a year-over-year basis in June, down from a 3.6 per cent gain in May.
Statistics Canada says without gasoline, that number falls to 2.2 per cent.
Shelter, driven by a 12.9 per cent rise in the homeowners' replacement cost index, and transportation prices contributed the most to the increase. Prices rose at a slower pace in four of the eight major components.
It was up 0.3 per cent on a month-over-month basis, down from 0.5 per cent in May.
"As expected, the slowdown was largely due to base effects from the comparisons to last year's low prices beginning to fade," said CIBC senior economist Royce Mendes.
"The month-over-month increase of 0.3 per cent NSA suggests that price pressures remained relatively firm, particularly for components such as shelter and gasoline."
Footwear and clothing lagged, due in large part to a drop in prices for women's clothing.
"The fall in clothing prices might seem somewhat strange given that non-essential stores reopened last month, but it probably reflects the fact that retailers offered heavy discounts to shift the inventory they held when stores first closed in the winter," said Capital Economics' senior Canada economist Stephen Brown.
Despite the still-elevated headline number, Mendes thinks the situation is temporary.
"While the headline rate is still well above the Bank of Canada's 2 per cent target, the deceleration appears to confirm the central bank's view that much of the recent pickup in inflation was transitory," said Mendes.
But Brown expects another inflation spike in the coming months before falling.
"With firms' selling price expectations continuing to surge in recent months, we continue to think that inflation will rise back towards 4 per cent later this summer, before it declines to less than 2 per cent in 2022," said Brown.
The set of June data is the first to incorporate updated baskets, which include a higher weighting to shelter costs. Statistics Canada made the change last week to better reflect current spending habits.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.