Falling gasoline prices, along with the rest of the energy complex, contributed to a decelerating annual rate of inflation in August.
The gasoline index declined 0.6% last month, compared to a rise of 0.1% in the prior month, according to Bureau of Labor Statistics data released Wednesday.
On an annualized basis, gas prices fell 10.3% while the energy index dropped 4%.
The Consumer Price Index (CPI) rose 2.5% over the prior year last month, decelerating from July's 2.9% annual gain. Overall, headline inflation rose 0.2% in August, the same increase as the prior month.
Prices at the pump have been on a downward trend, falling below the threshold average of $3.50 per gallon last month as oil slid.
On Wednesday, the national average for gasoline stood at $3.25 per gallon, down about $0.19 compared to the same day in August, according to AAA data.
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Concerns over weak demand have also sent oil prices to their lowest level since December 2021.
The steep declines have prompted Wall Street analysts to lower their price targets on the commodity.
Increasing signs of economic cracks in the US and Europe, where the summer driving season has been unwinding, have also weighed on prices.
On Wednesday, West Texas Intermediate (CL=F) rebounded from its lowest level this year to trade just above $67 per barrel, while Brent (BZ=F), the international benchmark price, hovered around $70 per barrel.
The energy index as a whole declined 0.8% month over month.
The BLS data also noted the rest of the energy components dropped on a month-over-month basis, as fuel oil declined by 1.9% and electricity fell by 0.7%.
The natural gas index also declined 0.1% in August.
Read more news about inflation's cooldown:
Inflation: Consumer prices rise at slowest pace since early 2021
Cell phones, furniture, used cars: Here's where prices are easing up as inflation cools
Stocks slide as inflation reading cements bets on small Fed rate cut
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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