UPDATE 1-Canada annual inflation rate cools more than expected in May

(Adds details from report)

OTTAWA, June 23 (Reuters) - Canada's annual inflation rate cooled more than expected in May, bringing it further away from the central bank's target as the cost of food fell and gasoline prices moderated, data from Statistics Canada showed on Friday.

The annual inflation rate declined to 1.3 percent from April's 1.6 percent, the lowest level since November 2016 and below forecasts for 1.5 percent. The three measures of core inflation the Bank of Canada set last year remained subdued.

The report could reduce odds that the central bank will raise interest rates next month after hawkish comments from two top policymakers last week set the stage for hikes sooner than had been anticipated.

CPI common, which the central bank says is the best gauge of the economy's underperformance, held at 1.3 percent. CPI median, which shows the median inflation rate across CPI components, declined to 1.5 percent, while CPI trim, which excludes upside and downside outliers, dipped to 1.2 percent.

Food prices fell on an annual basis for the eighth month in a row, down 0.1 percent as consumers paid less for meat and fresh fruit. Still, food price declines have been moderating in recent months.

Gasoline prices were up 6.8 percent, slowing significantly from April's 15.9 percent annual increase. Shelter costs also moderated as electricity prices fell.

(Reporting by Leah Schnurr; Editing by Chizu Nomiyama)