Inflation decelerated in July to 8.5% year over year following June’s peak of 9.1%, according to the Bureau of Labor Statistics report out Wednesday. A dip in energy prices helped cool the consumer price index, which has hovered at four-decade highs all year.
Overall consumer prices were flat for the month of July from June, down from June’s monthly jump of 1.3%. Gas prices were down 7.7% in July after reaching record highs in June. Gas is still up 44% year over year. Meanwhile, food rose 1.1% for the month, up 10.9% on the year.
Core consumer prices, which exclude more volatile food and energy, rose 5.9% on the year, or just 0.3% on the month. Used vehicles and apparel ticked down, while new cars increased by 0.6% month to month.
Housing rose 0.5% from June, up 5.7 percent year over year. Rent rose 0.7 percent in July.
The latest inflation numbers follow a stronger-than-expected jobs report released Friday, which has economists worried inflation could persist later in 2022, prompting the Federal Reserve to continue aggressively hiking interest rates. U.S. employers added 528,000 jobs in July, far exceeding expectations and dropping the unemployment rate to 3.5%, matching the 50-year low last seen in February 2020.
The Fed has twice raised the benchmark interest rate by a jumbo 75 basis points, making the overnight borrowing rate 2.25-2.5%, up from the 0.0-0.25% range it was in March. The governing body’s next meeting is in September.
Meanwhile, the U.S. economy has registered two consecutive quarters of negative growth, at odds with the labor market and prompting debate over whether the country is in recession.