Rising gas prices fueled another jump in inflation last month, however other costs went up more slowly, suggesting a gradual slowing of inflation, according to new data released Wednesday by the Labor Department.

In August, the consumer price index rose 3.7% year over year, an increase over July’s 3.2% annual increase. However the core reading, excluding the volatile food and energy categories showed an increase of 4.3%, marking a decline over July’s 4.7%, and registering the smallest increase in almost two years. However it is still far above the 2% target of the Federal Reserve.

The government noted that the large rise in gas prices was responsible for over half the monthly rise in the headline number. It emphasized the decline in the core number pointed to inflation coming under a slower, more gradual control than earlier in the year. Core prices are traditionally seen as more accurate measures of overall trends as they exclude volatile food and energy price fluctuations.

It is expected the Fed will skip a rate hike at its meeting next week. However the latest numbers keep the prospect of another rate hike this year on the table, possibly at its November or December meetings, according to economists, since the core figure increased faster in August than it did in July.

The new report points to inflation, which dropped quickly earlier in the year, now dropping at a more gradual rate going forward. In June, inflation dropped to 3%, down from a 9.1% peak one year prior. Economists say that some of the factors which had precipitated the earlier drop, such as improving supply chains, and lower energy prices, have had as much of an effect as they are likely to have.

Blerina Uruci, an economist at T. Rowe Price said, “We’re getting to the stage where we’ve basically had all the low hanging fruit in terms of disinflation. The progress on core inflation over the coming months is going to be slow and it’s going to be uneven.”

Consumer prices jumped 0.6% for the month in August, marking the largest increase in over a year. Gas prices were up almost 11%, however they have largely stabilized. On Wednesday, the average price at the pump for a gallon of gasoline was $3.85, which was unchanged from a month ago.

Core prices, which excludes food and energy, rose 0.3% in August, over July, however that is an increase over the 0.2% rise seen in the previous two months.

Energy costs were up 5.6% for the month in August. Auto insurance was up 2.4% for the month, and 19.1% over a year ago. Airfare was up 4.9% for the month, while grocery prices were up 0.2%.

Although last month Fed Chair Jerome Powell warned that inflation was still “too high,” Fed officials are warming to the idea that inflation is coming under control. In his speech at Jackson Hole, Powell said that the Fed intended to proceed “carefully” with any future interest rate hikes, a statement which was interpreted as meaning there would be no rate hike at the September 19-20 meeting.

The Fed has hiked rates at 11 of its past 12 meetings. The key rate presently sits at about 5.4%.

Traders are pricing in only a 3% chance of a rate hike at the next meeting, according to CME’s FedWatch. However at the November meeting traders see a 40% chance of a hike.

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