Inflation Cooled in July as Gas Prices Fell, But Food and Rent Remain Expensive

The Consumer Price Index rose 8.5 percent in July from a year ago, suggesting inflation is finally starting to cool after several months of record surges.

Gas prices are displayed at an Exxon gas station on July 29, 2022 in Houston, Texas. Getty Images

Inflation finally cooled in July after surging at record pace for six straight months. The Consumer Price Index in July was 8.5 percent higher than 12 months ago, the Bureau of Labor Statistics reported today (August 10). The increase was smaller than the 9.1 percent for the 12-month period ended in June.

A sharp decline in gas prices helped slow inflation in July, but the prices of many essential goods and services remained high.

The average gas price has fallen more than 20 percent since peaking at more than $5 a gallon in June, according to the AAA. July gas prices were 7.7 percent lower than June, but still 44 percent higher than a year ago.

The cost of food and shelter continued climbing in July. Food prices climbed 1.1 percent from June and nearly 11 percent from a year ago. Rent in July rose 0.7 percent from the previous month, and overall shelter costs were 5.7 percent higher on an annual basis.

Consumer price increases excluding the volatile food and energy, a measure of core inflation, barely changed in July and remained the same as June at 5.9 percent on an annual basis—a sign that the underlying economy begins to stabilize.

Although July’s inflation reading offers a reprieve for consumers, consumer prices are still rising at a much faster pace than policymakers would like. The Federal Reserve’s goal is to lower inflation to around 2 percent. Until then, it will likely keep raising interest rates and tightening monetary policy.

Inflation Cooled in July as Gas Prices Fell, But Food and Rent Remain Expensive