(CNN) –– High inflation gave the United States some respite during July. Consumer prices increased by 8.5% year-on-year, representing a slowdown compared to record increase of 9.1% in Junethe Bureau of Labor Statistics reported Wednesday.
On a month-to-month basis, inflation was 0%, compared to a 1.3% increase in June. Prices started rising sharply in early 2021, with the rate of inflation nearly doubling over the past year.
“I think inflation has probably peaked on a year-over-year basis,” said Bill Adams, chief economist at Comerica Bank.
Core inflation, which excludes volatile food and fuel components, was unchanged year-on-year after jumping 5.9% in June.
(Credit: B. Levine/Levine Roberts via ZUMA Press)
The marked increases for months in the Consumer Price Index, which covers a wide range of goods and services, represent a growing challenge for the Federal Reserve. Precisely, the Fed has the challenge of controlling the increase in inflation while trying to prevent the economy from sinking into a recession.
However, energy costs slowed for the month of July and fell 4.6%. However, they remained 32.9% higher compared to the previous year. Gasoline prices fell 7.7% month-on-month, providing some relief to drivers. But they were 44% higher on a year-over-year basis.
In contrast, food costs continue to rise considerably, 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 at home soared 13.1% year-on-year.
The increase in new car prices was 0.6%, marking a slowdown after last month’s 0.7% rise. Costs for used cars and trucks fell 0.4% and airfares fell 7.8%.
The rate of increase in housing costs also moderated slightly, with overall home prices, rent and homeowners’ equivalised income each rising a fraction of a percentage point from the previous month. However, accommodation costs rose 5.7% year-on-year.