August’s Consumer Price Index (CPI) showed that inflation rose 0.6%, with this monthly reading coming in right around estimates. On an annual basis, CPI increased from 3.2% to 3.7% last month, though this is still near the lowest level in more than two years. Core CPI, which strips out volatile food and energy prices, increased 0.3% while the annual reading declined from 4.7% to 4.3%.

Surging energy and gasoline prices accounted for much of the monthly increase, while tame food and shelter prices and declining costs for used cars helped inflation last month. Note that if the United Auto Workers strike ends up having a prolonged impact on the supply of new cars, we could see used car prices start to rise again.

What’s the bottom line? While annual inflation did move in the wrong direction, this notch higher is partly due to a lower figure from last August, which was removed from the rolling 12-month calculation and replaced with last month’s 0.6% reading. Inflation has made significant progress lower after peaking at 9.1% last year.

Plus, New York Fed President John Williams recently acknowledged that inflation would be even lower if decelerating shelter costs were better reflected in the reporting, with less of a lag effect.