After increasing by 1.3% in June, the U.S. Bureau of Labor Statistics said on Wednesday that overall inflation did not rise in July as gas prices dropped during the month.
While there was no rise in the Consumer Price Index in July, employees across the U.S. averaged a .5% increase in hourly wages.
In the 12-month period ending in July, inflation went up 8.5%, a drop from 9.1% last month. Last month's figure of 9.1% marked a four-decade high.
While energy prices dropped significantly in July, food prices continued to increase. Federal figures indicated that food at home increased 1.1% in July and food away from home increased 1.3%.
"The big takeaway is that it's possible inflation is slowing down," said Nick Roussanov, a professor at the Wharton School at the University of Pennsylvania. "We're not out of the woods yet, but I think it gives everyone, including the markets, a sigh of relief."
Also on Wednesday, AAA said that the average gas price has dropped $1 a gallon from a June 16 peak of $5.01.
"Many consumers anchor their expectations to these gas prices," Roussanov said. "The easing of the consumer budgets due to falling oil prices kind of allows them to maybe spend more freely."