On a month-to-month basis, there was a 0% increase in inflation in July. The annual inflation rate even dropped from 9.1% in June to 8.5% in July. Pundits were quick to argue this shows the Federal Reserve is seeing some early success in its actions to stabilize the prices of consumer goods. But it’s probably too soon to declare victory, since the cost of things like gas and cars are still swinging wildly from month to month. 

The Consumer Price Index (CPI) is an average measure, and it’s imperfect in many ways. It’s essentially a calculation of prices across hundreds of different categories—and not all are weighted equally. Housing prices, for example, count for a lot more than energy costs. And the CPI doesn’t track spending patterns of those living in rural areas, for example, nor Americans in the armed forces or those living in institutions such as prisons or mental health hospitals.

While overall inflation fell in July, it’s not consistent across all types of goods. Last month’s decline in overall inflation was driven, in large part, by falling gas prices. The CPI logged a 7.7% drop in July gasoline costs after jumping 11.2% month-over-month in June. Overall energy prices dropped by 4.6% in July, subtracting about 41 basis points from the total monthly inflation last month, according to the Council of Economic Advisors. 

This is good news, but energy only makes up about 7.5% of the total CPI calculation. And it's likely energy prices will continue to be volatile in coming months thanks to Russia’s ongoing invasion of Ukraine, the Council noted. 

Food and housing prices, on the other hand, haven’t seen the same wild spikes and troughs—instead these expenses have been steadily on the rise. Overall food prices rose 1.1% in July, with grocery expenses specifically hitting 1.3%, according to the CPI. That bump in food prices added about 15 basis points.

If that upward momentum continues, it could be problematic for consumers long-term. Together, food and housing carry the most weight in the index, making up about 46% of the overall CPI inflation measure. And housing prices, in particular, tend to be stickier than gas or car costs.

“The July Consumer Price Index data are a mixed picture. The plunge in gas prices means money in people’s pockets, but food prices are still rising rapidly,” wrote Dean Baker, senior economist with the Center for Economic and Policy Research.

Most consumers likely won’t see a major break from rising prices, but experts predict the drop in inflation will help moderate the Fed’s pace of rising interest rates. “The fight against inflation is not over, but July’s results suggest that steps in the right direction are being taken,” says Kurt Rankin, PNC senior economist.

“Although prices continue to rise for everyday necessities, the pace of gains for such items slowed, and energy costs fell back sharply for the month which should flow through to weaker price pressure on other consumer goods and services in the months to come," Rankin added.