Two and a half percent. That is how high inflation has been in this economy over the past twelve months, according to the consumer price index for August, which the Bureau of Labor Statistics released on Wednesday.

Prices rose 0.2% month-on-month, the smallest increase in more than 3.5 years. Another bright spot in Wednesday’s inflation report: Energy prices fell 0.8%, thanks to low oil prices – Brent crude fell below $70 a barrel this week for the first time since 2021.

But if you look at the data as half empty, 2.5% is still half a percentage point less than the US Federal Reserve’s inflation target of 2%.

The economic sectors in which inflation is only slowly declining are the services sector. Inflation in the out-of-home food sector actually rose last month.

“What does that reflect? Well, restaurants, for example. And a big part of restaurant costs is labor costs,” said Menzie Chinn, an economics professor at the University of Wisconsin.

He said yes, the job market has cooled recently, but wages are still high, particularly in the service industries, including the food industry.

“It is good if wages rise. This will potentially lead to costs that will be passed on to the consumer,” he said.

Another service category with sticky prices? Car insurance.

Michael Pugliese, a senior economist at Wells Fargo, said this could be seen as an echo of the price inflation we saw at the beginning of the pandemic.

“As that wore off, you started to see the insurance side of things as people got back out into the world and started driving again. It took a while for that to trickle down, right? It’s not like it was an instant thing,” he said.

This echo effect could also lead to high travel prices – the BLS airfare index rose by almost 4 percent from July to August.

Anne Villamil, an economics professor at the University of Iowa, said we are still feeling the effects of all the revenge spending that occurred later in the pandemic.

“People just said, ‘I want to get out and do something.’ So we saw a big increase in demand for flights and hotels,” she said.

However, much of this sluggish inflation is still declining. One big example is housing costs. “The housing market is just moving very, very slowly,” said Laura Veldkamp, ​​an economics professor at Columbia University.

She said the reason property prices are high is because the rents people are paying now are based on leases that were signed some time ago. “So part of what we are absorbing now are the price increases that were decided earlier this year,” she said.

At a time when inflation was higher than it is today.