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Fed’s Inflation Battle Is far From Won

Markets rallied Wednesday as data showed inflation cooling in July, but it isn’t time for investors to relax just yet: Price conditions remain uncomfortably hot.

The consumer-price index rose 8.5% from a year earlier, the Commerce Department said Wednesday, slowing from June’s 9.1% pace and a bit below expectations. This was thanks largely to declining gasoline prices. According to AAA, the national average price for regular unleaded gasoline is now $4.01, down from $4.68 a month ago. Gasoline futures have declined by even more, suggesting further retail price cuts ahead.