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.

Canada's inflation rate eased to 1.7 per cent in April, driven by a drop in prices after the federal government removed the consumer carbon tax, according to Statistics Canada.