OTTAWA, April 16 Reuters Canada39;s annual inflation rate ticked up to 2.9 in March, as expected, while core inflation measures eased for a third consecutive month, data showed on Tuesday, raising expectations for a midyear rate cut.

Analysts polled by Reuters had forecast inflation to accelerate to 2.9 from 2.8 in February. Monthovermonth, the consumer price index rose 0.6, the largest increase since July 2023, but less than a forecast 0.7 gain.

The acceleration in the annual rate was driven by costlier fuel at the pump as supply concerns and voluntary production cuts pushed global crude prices higher, Statistics Canada said. Excluding gasoline, inflation slowed to 2.8 from 2.9 in February.

The Bank of Canada BoC, trying to cut inflation to a 2 target, kept its key interest rate unchanged at a near 23year high of 5 last week, but said a cut in June was possible if the cooling trend in inflation is sustained.

The Canadian dollar fell to a fivemonth low against the U.S. dollar after the inflation data. It was last at C1.3820 per U.S. dollar .

Money market bets for a June rate cut increased to over 50 from 44 before data, according .

I don39;t think it39;ll create a big problem for Bank of Canada. We think that a June rate cut is possible. I still think that39;s a reasonable expectation, Doug Porter, chief economist at BMO Capital Markets, said.

Headline inflation has stayed under 3 since January and is in line with the BoC39;s forecast for it remain close to 3 in…