Inflation cooled in July as gas prices and airfares fell, a welcome reprieve for consumers and economic policymakers but not yet a conclusive sign that price increases are turning a corner.
The Consumer Price Index climbed 8.5 percent in the year through July, compared with 9.1 percent the prior month, a bigger slowdown than economists had projected. After stripping out food and fuel costs to get a sense of underlying price pressures, prices climbed by 5.9 percent through July, matching the previous reading.
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On a monthly basis, the price index did not move at all in July. That’s because prices for fuel, airfares and used cars declined, offsetting increases in rent and food costs.
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Core inflation was also slower than economists had expected on a monthly basis, climbing by 0.3 percent. In June, that figure was 0.7 percent.
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The report is probably welcome news at the White House and the Federal Reserve, both of which have been waiting for inflation to decelerate.
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But it’s easy to overstate how much the slowdown in July matters. Inflation is still abnormally high. The decline owed in large part to gas prices, and they can always jump again.
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There are some real reasons to believe inflation will slow in the months ahead: Supply chain pressures, for instance, show signs of easing.
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But there are also reasons to worry. Wage growth remains rapid. And housing costs, particularly rents, continue to climb, which could keep inflation high for some time.
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