Canada's annual inflation rate eased to 1.7% in April as energy prices dropped sharply after the removal of a federal consumer carbon tax, but core inflation edged up, Statistics Canada said on Tuesday.

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.

Headline inflation slowed in April mainly due to drop in gasoline prices because of the elimination of the federal carbon tax, but it was a different story for the measures the Bank of Canada follows.