The central bank, which predicts inflation should move back down toward 2 per cent by early 2019, will announce its next interest rate decision on October 24 and markets are expecting a hike.
Growth in gas prices eased to 12 per cent annually compared with 20 per cent a month earlier, and air transportation slowed to 7.4 per cent from 26.4 per cent.
The consumer price index in September rose 2.2 percent from that a year ago, in comparison with a year-on-year increase of 2.8 percent in August.
The inflation report comes ahead of the Bank of Canada's rate decision next week when it will also update its forecast for the economy in its monetary policy report.
"Beyond next week, we see two more hikes in the first half of 2019", said Paul Ferley, assistant chief economist at the Royal Bank of Canada.
Inflation had hit 3% in July - the highest in seven years - on the back of gasoline and a jump in prices for air transportation and other travel-related services.
Air transportation costs, which jumped 16 percent in July, plunged 17 percent in September.
Food prices were up 1.8 per cent, while shelter costs rose 2.5 per cent. Alcoholic beverages and tobacco products were up 4.4 percent. Traveller accommodation service prices were down 6.2 per cent last month.
Separately, Statscan said the value of Canadian retail trade unexpectedly fell by 0.1 per cent in August, the second decline in three months, in part due to lower sales of gas and clothing.
Sales at gasoline stations were down 2.0 percent, while clothing and clothing accessories stores fell 1.2 percent.
"However, the slight easing in underlying price pressures combined with signs of softening growth (as indicated by manufacturing shipments and retail sales) will prevent a follow up hike in December and encourage a very gradual path higher in rates still", Grantham wrote in a research note to clients.
Motor vehicle and parts dealers experienced a gain of 0.8 per cent in August - the first time in three months - because of higher sales at new auto dealers and at automotive parts, accessories, and tire stores to a lesser extent.