The numbers: The U.S. consumer price index was unchanged in July, the Labor Department said Wednesday, compared with the 1.3% gain in the prior month.

Economists polled by The Wall Street Journal had estimated a 0.2% advance in July.

The rate of inflation in the 12 months ended in July retreated to 8.5% from a 41-year high of 9.1% in June.

The closely-watched “core” measure of inflation that omits volatile food and energy rose 0.3% in July, down from a 0.5% gain in the prior month. The 12-month rate remained steady at 5.9%.

Key details: The big rise in inflation was the cost of food, which rose 1.1% in July. Over the past year, food prices are up 10.9%, the highest since May 1979.

  • Energy prices fell 4.6% in July, with gasoline prices down 7.7%.
  • The cost of shelter rose 0.5% in July after a 0.6% increase in the prior month.
  • Used-car prices fell 0.4% in July and airfares fell 7.8%.
  • Overall, the prices of goods fell 0.5%, while service sector inflation rose 0.3%.

In a separate release, wages rose 0.5% adjusted for inflation in July, the government said.

Big picture: The cooling of headline inflation will certainly be welcome at the Federal Reserve, but economists caution 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% pace, down from 7.9% last month.

Fed officials have been talking tough and insist they want to get inflation back down to their 2% target. Fed Chair Jerome Powell said the central bank wants to see “compelling evidence inflation is moving down” before the central bank stops raising interest rates to slow the economy down.