(CNN) — High inflation gave the US some relief during July. Consumer prices rose 8.5% year on year, slowing from a record 9.1% increase in June, the Bureau of Labor Statistics reported Wednesday.
On a monthly basis, inflation was 0%, compared to a 1.3% increase in June. Prices began to rise sharply in early 2021, with inflation nearly doubling over the past year.
“I think inflation has probably peaked on an annual basis,” said Bill Adams, chief economist at Bank of Comica.
Core inflation, which strips out volatile food and fuel components, remained unchanged year over year after jumping 5.9% in June.
The notable increases for months in the Consumer Price Index, which covers a wide range of goods and services, is a growing challenge for the Federal Reserve. Specifically, the Fed faces the challenge of controlling the increase in inflation while trying to prevent the economy from sliding into recession.
With that said, energy costs for the month of July slowed and fell by 4.6%. However, they remained 32.9% higher compared to the previous year. Gasoline prices fell 7.7% month over month, providing some relief to drivers. But it was 44% higher year on year.
In contrast, food costs continued to rise significantly, with an increase of 1.1% compared to the previous month and 10.9% compared to last year. This is the increase since May 1979. Food prices at home are up 13.1% year over year.
The increase in new car prices was 0.6%, marking a slowdown after last month’s 0.7% increase. Used car and truck costs fell 0.4% and airfares fell 7.8%.
The rate of increase in housing costs also eased slightly, with overall home prices, rents and homeowner’s equivalent income rising just a fraction of a percentage point from the previous month. However, accommodation costs are up 5.7% year over year.