WASHINGTON • Falling prices for gas, airline tickets and clothes helped give Americans a slight break from the pain of high inflation last month, though overall price increases slowed only modestly from a four-decade high that was reached in June.

Consumer prices jumped 8.5% in July compared with a year earlier, the government said Wednesday, down from a 9.1% year-over-year increase in June. On a monthly basis, prices were unchanged from June to July.

Much of the relief last month was felt by travelers: Hotel room costs fell 2.7% from June to July, airfares nearly 8% and rental car prices a whopping 9.5%. Those prices declines followed steep increases in the past year after COVID-19 cases eased and travel rebounded. Airfares are still nearly 30% higher than they were a year ago.

Last month’s declines in travel-related prices helped lower so-called core inflation, a measure that excludes the volatile food and energy categories to provide a clearer picture of underlying inflation. Core prices rose just 0.3% from June, the smallest month-to-month increase since March. And compared with a year ago, core

inflation amounted to 5.9% in July, the same year-over-year increase as in June.

All told, the July figures raised hope that inflation might have peaked after more than a year of relentless increases that have strained household fi-nances, soured Americans on the economy, led the Federal Reserve to raise borrowing rates aggressively and dimin-ished President Joe Biden’s public approval ratings.

Still, core prices have slowed in the recent past only to re-accelerate in sub-sequent months. And even if inflation continues to weak-en, it is a long way from the Fed’s 2% annual target.

“There’s good reason to think inflation will continue to slow,” said Michael Pugliese, an econ-omist at Wells Fargo. “What I think gets lost in that discus-sion is, slow by how much?

”Even if consumer inflation were to slow to 4% — less than half its current level

— Pugliese suggested that it would still likely cause the Fed to keep raising rates

.Americans are still absorb-ing bigger price increases than they have in decades. Grocery prices jumped 1.1% in July and are 13% higher than a year ago, the largest year-over-year in-crease since 1979. Bread pric-es leapt 2.8% last month, the most in more than two years. Rental and medical care costs rose, though slightly less than in previous months.

Average paychecks are ris-ing faster than they have in decades, but not fast enough to keep up with those rising costs. As a result, some peo-ple who had retired have felt the need in recent months to return to the workforce.

Among them is Charla Bu-lich, who lives in San Leandro, Calif. For the past six months Bulich, 73, has worked a few hours a week caring for an el-derly woman because her So-cial Security and food stamps don’t cover her rising costs .

“I go over my budget all the time — that’s why I had to go get a job,” Bulich said. “I wouldn’t even think about buying hamburger meat or a steak or something like that.

”Now, she worries that she will lose her food stamps in coming months because of her extra income.

Micheal Altfest, director of community engagement at the Alameda County Community Food Bank in Oakland, said his organization now provides about 4.5 million pounds of food a month, up from below 4 million in January. The group has also budgeted for a 66% increase in fuel costs. That’s mostly because of higher gas prices but also because it’s now using more trucks to keep up with the demand for food.

Altfest’s rent recently jumped 14%, he said, forcing him to recalibrate his budget.

“All these costs are going up, all at once,” he said. “The people here were stretched already.”

Wednesday’s report in-creased hope that the modest slowdown in inflation might enable the Fed to slow the pace of its increases in short-term rates when it meets in late September — and sent stock prices jumping. How quickly and how far the Fed raises borrowing costs has significant effects on the econ-omy: Sharper hikes tend to reduce consumer and business borrowing and spending and make a recession more likely.

If the Fed doesn’t have to raise rates as high to restrain prices, it has a better chance of engineering an elusive “soft landing,” whereby growth slows enough to curb high inflation but not so much as to cause a recession

.Biden seized on the report in remarks he made Wednes-day, highlighting the flat monthly inflation figure:

“I just want to say a number: Zero,” he said. “Today, we re-ceived news that our economy had zero percent inflation in the month of July.”

Biden has pointed to declin-ing gas prices as a sign that his policies — including large releases of oil from the nation’s strategic reserve — are helping lessen the higher costs that have hurt household finances, particularly for lower-income Americans and Black and His-panic households.

Yet Republicans are stressing the persistence of high infla-tion as a top issue in the mid-term congressional elections, with polls showing that elevat-ed prices have driven Biden’s approval ratings down sharply.

There are other signs that inflation might fade in coming months. Americans’ expecta-tions for future inflation have fallen, according to a survey by the Federal Reserve Bank of New York, likely reflecting the drop in gas prices that is high-ly visible to most consumers.

Inflation expectations can be self-fulfilling: If people be-lieve inflation will stay high or worsen, they’re likely to take steps — such as demanding higher pay — that can send prices higher in a self-per-petuating cycle. Companies then often raise prices to off-set higher their higher labor costs. But the New York Fed survey found that Americans’ foresee lower inflation one, three and five years from now than they did a month ago.

Supply chain snarls are also loosening, with fewer ships moored off Southern Califor-nia ports and shipping costs declining. Prices for commod-ities such as corn, wheat and copper have fallen steeply.

Yet in categories where price changes are stickier, such as rents, costs are still surg-ing. One-third of Americans rent their homes, and higher rental costs are leaving many of them with less money to spend on other items.

Stubborn inflation isn’t just a U.S. phenomenon. Prices have jumped in the United Kingdom, Europe and in less developed nations such as Argentina