US inflation eases to 8.5% in July as energy costs dip

US inflation decelerated in July by more than expected, reflecting lower energy prices, which may take some pressure off the Federal Reserve to continue aggressively hiking interest rates.

The consumer price index increased 8. 5% from a year earlier, cooling from the 9. 1% June advance that was the largest in four decades, Labor Department data showed Wednesday. Prices were unchanged from the prior month. A decline in gasoline offset increases in food and shelter costs.

The data may give the Fed some breathing room, and the cooling in gas prices, as well as used cars, offers respite to consumers.