The consumer price index fell 0.3 percent in the month and rose 2.4 from a year earlier, slowing from a pace of 2.5 percent in September, as the costs of gasoline and passenger vehicles declined. Economists forecast a 0.1 percent monthly gain and a 2.8 percent annual increase, based on the median of 23 responses in a Bloomberg News survey.

The figures suggest inflation is more tepid than the Bank of Canada predicted in a quarterly forecast last month as a higher currency makes imported goods cheaper and creates more room for the central bank to cut interest rates.

The central bank said on Oct. 18 that inflation would peak at 3 percent this year before returning to policy makers' 2 percent target in the second half of 2008.

The Canadian dollar has gained as much as 27 percent this year, touching an all-time high of 90.58 Canadian cents per U.S. dollar on Nov. 7 before weakening in the past two weeks. The currency rose to 98.25 Canadian cents per U.S. dollar at 9:18 a.m. in Toronto, from 98.38 cents yesterday.

While the Bank of Canada isn't expected to lower rates at its next decision on Dec. 4, policy makers probably will indicate a reduction is coming, said Avery Shenfeld, a senior economist with CIBC World Markets in Toronto.

Core inflation, which excludes some volatile goods such as gasoline, advanced 1.8 percent in October from a year earlier, the slowest since June 2006, compared with 2 percent in September. On a monthly basis, core prices fell 0.2 percent.

Economists forecast a 2 percent annual rate for core inflation and a 0.1 percent increase for the month of October.

The drop in the October consumer price index was led by a 3.3 percent decline in gasoline costs. Lower prices also were recorded for food, household furnishings, passenger vehicles and clothing.