Inflation cooled off in July as tumbling gas prices offered Americans much-needed relief

The people who spend are rejoicing.

The Bureau of Labor Statistics said the consumer price index rose 8.5% in the year through July. The economists expected the measure to go up. The headline inflation rate went up by 9.1% in the year through June, but the print shows that it has gone up by more than expected.

There was no change in the index between June and July. It was less than the median forecast of a small rise, but it was still a deceleration from the previous month's surge.

We may be past the peak of inflation. The national average price per gallon of gas dropped to $4.19 from $5 in the month of July. The index had been lifted earlier in the year by soaring energy prices.

According to the report, energy prices fell last month. The cost of gas and fuel oil went down.

The next inflation report could show a decline in pump prices. The national average is now less than $4 per gallon.

The US is not out of the woods. Core inflation, which excludes food and energy prices, rose 5.9% in the year through July, matching the prior month's 5.9% gain, but its month-over-month gain was much smaller than June's 0.7% monthly rate The prints show that inflation is easing in other parts of the country.

Vehicle and housing costs lifted the core measure. Through July, the government's new-vehicle index was up 0.6%, slightly less than in June. Shelter prices were still above the pre-pandemic average despite cooling from the prior month.

The core gauge is seen as a better gauge of underlying inflation due to the volatile nature of food and energy costs. A return to healthier price growth will take several months according to the still-elevated reading.