The numbers: The U.S. consumer price index was unchanged in July, the Labor Department said Wednesday, compared with a 1.3 percent gain the previous month.
Economists polled by the Wall Street Journal had estimated a 0.2% advance in July.
The inflation rate in the 12 months ended July fell to 8.5% from a 41-year high of 9.1% in June.
The “core” measure of inflation that omits volatile food and energy rose 0.3% in July, down from a 0.7% rise the previous month. The 12-month rate remained stable at 5.9%.
Key facts: The big increase in inflation was the cost of food, which rose 1.1% in July. Over the past year, food prices have risen 10.9%, the highest since May 1979.
Energy prices fell 4.6% in July, and gasoline prices fell 7.7%.
The cost of housing rose 0.5% in July after a 0.6% increase the previous month.
Used car prices fell 0.4% in July and airline tickets fell 7.8%.
Overall, goods prices fell 0.5%, while service sector inflation rose 0.3%.
In a separate statement, wages rose an inflation-adjusted 0.5% in July, the government said.
Big picture: The cooling of headline inflation will certainly be welcome at the Federal Reserve, but economists warn that the Fed wants to see more months like this and that officials are also focusing on core prices.
Over the past three months, core inflation was 6.8%, down from 7.9% last month.
Fed officials have been talking tough and insist they want to return inflation to their 2% target. Fed Chairman Jerome Powell said the central bank wants to see “persuasive evidence that inflation is coming down” before the central bank stops raising interest rates to slow the economy.
Looking ahead: July’s CPI report could be the first clear indication that consumers are pushing back against high inflation in response to tighter monetary policy. It’s a sign that inflation is close to peaking, although the uphill climb will be slow due to rising wages and rents,” said Sal Guatieri, senior economist at BMO Capital Markets.
Market reaction: U.S. stocks DJIA, +0.08% SPX, -0.07% opened much higher after the release of the CPI data. The yield on the 2.869% 10-year Treasury note TMUBMUSD10Y rose to 2.8%.