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Consumer prices rose 8.5% year-on-year in July as the summer of inflation continued.

Rob Wile is the latest business news reporter for NBC News Digital.

The consumer price index hit 8.5% in his July,his highest in 40 years in June It rose compared to 9.1%.

An economist surveyed by the Wall Street Journal had predicted annual inflation would fall to 8.7%. That number is still close to the highest in 40 years.

Gasoline prices, one of the main drivers of inflation, have been falling for several weeks. As of Tuesday, the national average price was about $4 a gallon, about $1 cheaper than in June.

The primary reason for the economic recovery is the Federal Reserve's aggressive move to raise interest rates. The US central bank hopes that by increasing borrowing, it will curb demand for goods and services and put downward pressure on prices.

And it seems to be working, with gasoline demand dropping and oil prices rising from over $120 a barrel in June to about $97 a barrel on Tuesday. fell.

Despite these declines, Federal Reserve officials have indicated they will continue to take a tough stance against further inflation. For one thing, they face a US economy that continues to add jobs at a breakneck pace. Last week, the Bureau of Labor Statistics announced that the US economy added another 528,000 new jobs. This indicates that labor demand remains strong.

Private sector workers' wages are also rising, putting upward pressure on prices. Wages and salaries in the second quarter increased by 5.8% compared to the same period last year. This is the fastest growth rate on record going back to 2001, but is still below current inflation.

In an effort to keep prices down, the Fed raised its key interest rate by 0.75% in late July. It's the fourth rate hike this year.

"In my view, we should consider raising [interest rates] on a similar scale until we see inflation falling in a consistent, meaningful and sustained manner." Federal Reserve Governor Michelle Bowman said in a recent prepared statement According to CNBCthe Kansas Bankers Association.

San Francisco Fed President Mary Daly said on Sunday that the Fed's fight against inflation was "not over yet." "Americans are losing ground every day, so we have to focus on bringing down inflation," Daly added.

The continued hawkish stance by the Federal Reserve is also putting pressure on stocks.

Seema Shah, chief strategist at Principal Global Investors, said, "Until inflation subsides and the Federal Reserve realigns its priorities from inflation toward growth, it will continue to look attractive. A further rise is likely to be unsustainable." week.