The annual rate of inflation dropped 0.4 points in March, the lowest growth rate since January 2007, landing at 1.4 per cent.
In March, Statistics Canada listed the inflation rate, or consumer price index, at 1.8 per cent.
The rates have slowed for four months in a row.
According to StatsCan figures released Thursday, the core rate of price increases was also down, going to 1.3 per cent from 1.5 per cent in February.
The core rate removes volatile items such as costs of energy and food from the calculation. It is closely watched by the Bank of Canada to determine economic trends and is a key factor affecting interest rates, which are set to be reassessed on Tuesday.
The central bank has indicated rates will likely drop, thanks to low inflation and the struggling United States economy.
Higher mortgage costs and gas prices were the main factors driving the month's inflation, said StatsCan.
The cost of mortgages went up 8.3 per cent in March, thanks to higher prices for new homes.
In Saskatchewan, homeowners' replacement costs soared well beyond the rest of the country to 46.7 per cent. The national average was 4.8 per cent. Saskatchewan also saw the highest overall inflation rate nationally, at 3.2 per cent.
Prices at the pump rose 7.9 per cent -- notably less than the 17.1 per cent increase recorded in February. In the past year, the price of fuel has soared 29.6 per cent -- the sharpest increase since Gulf of Mexico hurricanes slowed oil production in 2005.
Baked goods rose in price by 9 per cent in March following increased wheat prices.
Such spikes were counterbalanced by the price of vehicles, which dropped 7.1 per cent, and fresh vegetables, which dropped 17.8 per cent. It was the largest annual decline in produce prices in 12 years.
Grocery prices also decreased, going down 0.3 per cent from the same time a year ago. So did computer equipment, which dropped 14.9 per cent.
With files from The Canadian Press
