At first glance at last week’s inflation report, it looks like we did not see a month-over-month increase in prices, but actually prices did go up. So if inflation did not increase, yet prices still went up, what gives? Energy prices are the reason, they have been tumbling since their peak in June. If you factor in everything including gasoline prices, it appears inflation finally did not increase.

Well falling energy prices are a relief for most of us, but if you strip out energy prices, inflation soared everywhere else, especially food prices. Food prices rose staggeringly from June to July, but factor in falling gasoline prices, inflation did not overall increase inflation. Reality is that inflation did occur and especially in food prices, but with factoring in falling gasoline prices it appears that inflation did not rise from June to July.

Though inflation overall did not go any higher, the work is not done. Inflation is so high that it would have to go down 15% – 20% just to get back to pre-pandemic levels. There is a lot of work left to do, but for right now lets hope that we are seeing peak inflation, and it goes down form here on.

Given the softness the Fed says it is starting to notice in consumer spending, we are likely to be experiencing peak inflation. We could have seen the worst of it, and prices could stabilize or start to fall.