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There was more good news Friday for inflation, as import prices fell more than expected and brought some much-needed relief for consumers.

The report capped off a relatively upbeat week for those worried about rising prices — and “relatively” is the operative word — as the U.S. is on pace this year to import just over $4 trillion of goods and services this year, according to the latest Bureau of Economic Analysis data.

With Americans already paying huge bills for food, energy and a host of other items in their daily lives, any respite is a welcome one. After all, the monthly import price drop of 1.4% was just the first this year, and the year-over-year increase is still more than 8.8%.

That news followed reports earlier in the week that both wholesale and retail price increases abated for the month. Producer prices declined 0.5%, and consumer prices including food and fuel were flat, both numbers owing largely to a sharp slide in most of the energy complex.

People are noticing: A New York Federal Reserve survey released Monday showed consumers are expecting inflation to stay high but not by as much as previous months. On Friday, the University of Michigan consumer sentiment survey — whose ups and downs tend to ride in tandem with prices at the pump — was higher than expected, though still just off record-low levels hit in June.

Taken together, the numbers are reason for at least a little optimism. But it’s probably wise to put exuberance on hold.

The consumer price index is still up 8.5% from a year ago, while the producer price index has surged 9.8% during the same period.

Krishna Guha, who heads global policy and central bank strategy for Evercore ISI, cautioned in a client note on CPI that, “while the report is consistent with the notion that inflation pressures may finally have peaked, this is just one report.”

Similar comments came Friday from Richmond Federal Reserve President Thomas Barkin. The central bank official told CNBC that the inflation news was “very welcome,” but added that he didn’t see any reason to pull back on the interest rate increases that some economists fear will drag the U.S. into a recession.

“There is a very long way to go before the Fed will feel it has sufficient compelling evidence that inflation is moderating to stop raising rates,” Guha added.

The Fed and investors will get a look next week at how much of an impact inflation has made on spending.

The Wednesday advance report from the Commerce Department is expected to show a modest 0.2% headline gain for July in retail sales after a 1% increase in June, according to FactSet. The report is not adjusted for inflation.

However, there is a wide range of opinion on where the numbers could land.

Citigroup said its credit card data show a potential 1.1% decline for the month, while Bank of America said it sees a 0.2% decrease, though control group spending — excluding a variety of volatile categories — may have risen 0.9%.

Fed officials will be watching closely to see larger trends in how inflation is impacting Main Street.

“It does appear that a tentative peak in inflation is in place,” said Joseph Brusuelas, chief economist at RSM.

However, he said this week’s numbers are likely to do little to sway a Fed intent on stomping inflation down to the central bank’s 2% target.

“I think that the July inflation does nothing to alter the path of Fed policy, and any notion that a Fed pivot is at hand should be dismissed,” he said. “We are some months away from any potential clear and convincing evidence that inflation is well on its way back to the 2% target that currently defines price stability.”

Wholesale prices fell in July for the first time in two years as a plunge in energy prices slowed the pace of inflation, the Bureau of Labor Statistics reported Thursday.

The producer price index, which gauges the prices received for final demand products, fell 0.5% from June, the first month-over-month decrease since April 2020, the month after Covid-19 was declared a pandemic. Economists surveyed by Dow Jones had been expecting an increase of 0.2%.

On an annual basis, the index rose 9.8%, the lowest rate since October 2021. That compares with an 11.3% increase in June and the record 11.7% gain in March.

Most of the decline came from energy, which dropped 9% at the wholesale level and accounted for 80% of the total decline in goods prices, which fell 1.8%. The index for services rose 0.1%.

Stripping out food, energy and trade services, PPI increased 0.2% in July, which was less than the expected 0.4% gain. Core PPI rose 5.8% from a year ago.

The numbers come a day after the consumer price index showed that inflation was flat in July though up 8.5% from a year ago. The easing in the CPI also reflected the slide in energy prices that has seen prices at the pump fall below $4 a gallon after hitting record nominal levels above $5 earlier in the summer.

“Cooling prices paid by producers portend a further cooling for consumer prices, as producer prices are further up the inflation pipelines,” said Jeffrey Roach, chief economist at LPL Financial. “We expect producer prices to ease as supply chains improve. It could take up to three months for improved supply chains to affect prices for the end consumer.”

Federal Reserve officials are watching the inflation data closely for clues about where the economy stands after more than a year of wrestling with high inflation.

Before July’s easing, prices had been running at their highest levels in more than 40 years. Supply chain issues, demand imbalances, and high amounts of fiscal and monetary stimulus associated with the pandemic had driven the annual CPI rate past 9%, well above the Fed’s 2% long-run target.

This week’s data could give the Fed reason to dial back rate increases that have come in successive 0.75 percentage point increments in June and July. Markets are now pricing in a 0.5 percentage point move in September.

A separate Labor Department report Thursday showed that weekly jobless claims totaled 262,000 for the week ended Aug. 6, an increase of 14,000 from the previous week though 2,000 below the estimate.

Claims have been elevated in recent weeks in a sign that a historically tight labor market is shifting. Continuing claims rose 8,000 to 1.43 million.

Prices that consumers pay for a variety of goods and services rose 8.5% in July from a year ago, a slowing pace from the previous month due largely to a drop in gasoline prices.

On a monthly basis, the consumer price index was flat as energy prices broadly declined 4.6% and gasoline fell 7.7%, according to the Bureau of Labor Statistics. That offset a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs.

Economists surveyed by Dow Jones were expecting headline CPI to increase 8.7% on an annual basis and 0.2% monthly.

Excluding volatile food and energy prices, so-called core CPI rose 5.9% annually and 0.3% monthly, compared with respective estimates of 6.1% and 0.5%.

Even with the lower-than-expected numbers, inflation pressures remained strong.

The jump in the food index put the 12-month increase to 10.9%, the fastest pace since May 1979. Butter is up 26.4% over the past year, eggs have surged 38% and coffee is up more than 20%.

Despite the monthly drop in the energy index, electricity prices rose 1.6% and were up 15.2% from a year ago. The energy index rose 32.9% from a year ago.

Used vehicle prices posted a 0.4% monthly decline, while apparel prices also fell, easing 0.1%, and transportation services were off 0.5% as airline fares fell 1.8% for the month and 7.8% from a year ago.

Markets reacted positively to the report, with futures tied to the Dow Jones Industrial Average up more than 400 points and government bond yields down sharply.

“Things are moving in the right direction,” said Aneta Markowska, chief economist at Jefferies. “This is the most encouraging report we’ve had in quite some time.”

The report was good news for workers, who saw a 0.5% monthly increase in real wages. Inflation-adjusted average hourly earnings were still down 3% from a year ago.

Shelter costs, which make up about one-third of the CPI weighting, continued to rise and are up 5.7% over the past 12 months.

The numbers indicate that inflation pressures are easing somewhat but still remain near their highest levels since the early 1980s.

Clogged supply chains, outsized demand for goods over services, and trillions of dollars in pandemic-related fiscal and monetary stimulus have combined to create an environment of high prices and slow economic growth that has bedeviled policymakers.

The July drop in gas prices has provided some hope after prices at the pump rose past $5 a gallon. But gasoline was still up 44% from a year ago and fuel oil increased 75.6% on an annual basis, despite an 11% decline in July.

Federal Reserve officials are using a recipe of interest rate increases and related monetary policy tightening in hopes of beating back inflation numbers running well ahead of their 2% long-run target. The central bank has hiked benchmark borrowing rates by 2.25 percentage points so far in 2022, and officials have provided strong indications that more increases are coming.

There was some good news earlier this week when a New York Fed survey indicated that consumers have pared back inflation expectations for the future. But for now, the soaring cost of living remains a problem.

While inflation has been accelerating, gross domestic product declined for the first two quarters of 2022. The combination of slow growth and rising prices is associated with stagflation, while the two straight quarters of negative GDP meets a widely held definition of recession.

Wednesday’s inflation numbers could take some heat off the Fed.

Recent commentary from policymakers has pointed toward a third consecutive 0.75 percentage point interest rate hike at the September meeting. Following the CPI report, market pricing reversed, with traders now anticipating a better chance of a lesser 0.5 percentage point move.

“At the very least, this report takes the pressure off the Fed at the next meeting,” Markowska said. “They’ve been saying they’re ready to deliver a 75 basis point hike if they have to. I don’t think they have to anymore.”