At the same time, supply chain disruptions that led to shortages and starkly pushed up prices starting in 2021 have gradually cleared up, allowing costs for many goods to stop rising or even come down slightly.
“I don’t think they’re fully confident yet that core inflation has sustainably slowed; this is adding another building block on gaining that confidence,” said Omair Sharif, founder of the research firm Inflation Insights.
Given the progress, central bankers are now contemplating whether they need to raise interest rates further. They left them unchanged, in range of 5.25 to 5.5 percent, at their meeting this month, while forecasting that they might make one more rate increase this year. At the same time, given how strong the economy remains, officials have signaled that they may need to leave interest rates set to a high level for longer to ensure that inflation returns to normal in a sustainable way.
“We’re taking advantage of the fact that we have moved quickly to move a little more carefully now,” Jerome H. Powell, the Fed’s chair, said during a news conference after the Fed’s meeting last week.
Mr. Sharif said that he thought the Fed could hold off on a rate move in November in light of the fresh inflation report, but that an increase was still possible in December, because inflation may pick back up slightly this autumn.