The U.S. inflation rate cooled slightly to 8.3 per cent last month, down for the second month in a row after hitting a 40-year high of 9.1 per cent in June, the U.S. Bureau of Labour Statistics reported.

While the decline was expected, it didn't go down by as much as economists thought it would, and that's largely because the price of many goods and services continues to increase at a breathtaking pace.

Food prices have increased by 11.4 per cent in the past 12 months. That's the fastest pace of increase for that category since 1979.

And while gasoline prices have come down steadily for 10 weeks in a row after spiking in the early days of the conflict in Ukraine, energy costs are still sharply higher than what they were this time last year.

The energy index is up by 23.8 per cent in the past 12 months. That's down from 32.9 per cent last month.

Food and energy prices are often volatile, so policy-makers try to strip them out of the numbers to see what is happening with so-called core inflation for everything else. If food and energy prices are ignored, the U.S. inflation rate came in at 6.3 per cent for the month. That's up from 5.9 per cent previously.

Inflation has risen to multi-decade highs around the world in recent months, as loose monetary policy by central banks around the world earlier in the pandemic has helped fuel torrid demand for goods and services.

Central banks are trying to hike their rates in a hurry to get ahead of inflation, so Tuesday's data will come as some measure of relief to the Federal Reserve, which is in charge of interest rates in the U.S.

But despite being down for two months in a row, inflation continues to increase in many categories, so economists think that more rate hikes are coming.

"With most categories except for energy commodities looking uglier, the Fed will no doubt be hiking by at least 75 basis points next week," CIBC economist Katherine Judge said.