On Wednesday, the Bureau of Labor Statistics (BLS) released its most recent monthly Consumer Price Index (CPI). The report, which tracks prices across various consumer products, showed no net price growth over the last month.

At the same time, year-over-year inflation fell to 8.5% in July after reaching a four-decade peak of 9.1% in June.

That drop is largely thanks to the plummeting price of gas, which fell 7.7% since June, offsetting smaller price increases in other sectors like food and housing.

The last time inflation gave consumers something to be optimistic about was in May, when the CPI showed that inflation had dropped to 8.3% in April after a previous high of 8.5% in March. In the summer months that followed, however, record gas prices kept that headline inflation number up.

July’s drop seems to be different, following other evidence that prices might actually be moderating. On Monday, the Federal Reserve of New York released its Survey of Consumer Expectations, measuring how consumers are feeling about the economy. This week’s report showed the largest monthly decline in inflation fears since the survey began in 2013. 

Consumers expect inflation to simmer at 6.2% over the next year, according to the survey, down from 6.8% in June. That drop has tangible implications since inflation expectations are considered to be tied to economic reality, with businesses hiking prices in response to what they anticipate the economy to look like in the near term. 

Those expectations are likely a direct result of the highly visible and steady fall of gas prices, which peaked mid-June at a national average of $5.02 per gallon, according to AAA. Until they started to decline, those prices helped sour the national economic mood, with consumers reminded of inflation every time they needed to fill up their cars. 

Today, gas costs an average of $4.01 per gallon. What happened to bring it down so much?

An unpredictable market

Throughout this summer, gas prices have been a particular sore spot for President Joe Biden, who has seen his approval ratings decline as multiple polls showed Americans feeling increasingly negative about the economy. 

With the price of gas tied to the price of oil and subject to pandemic-related supply issues and geopolitical disruptions, the issue proved largely out of his direct control. Still, he tried to rein in prices. 

In June, he sent a letter to oil company executives, criticizing them for making record profits while not increasing production enough to satisfy demand. 

“I understand that many factors contributed to the business decisions to reduce refinery capacity, which occurred before I took office,” he wrote. “But at a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable.”

In July, he repeated that same idea on Twitter: “My message to the companies running gas stations and setting prices at the pump is simple: This is a time of war and global peril.” 

Besides these public calls for oil companies to help lower prices, Biden also proposed the idea of a three-month national gas tax holiday. The holiday, which analysts said would not reduce prices significantly, did not go into effect. Several states, however, enacted their own, including Maryland, Georgia, and Connecticut. 

At the same time, the White House coordinated the release of federal emergency oil reserves “to address the significant global supply disruption caused by Putin’s war on Ukraine and help stabilize volatile energy costs for American families,” according to a statement from the Department of Energy.

It’s unclear, however, how much those efforts impacted July’s dramatic drop in gas prices, and how much is due to the declining price of crude oil.