U.S. inflation fell to 7.7% in October, the lowest year-over-year rate since January and a positive sign that aggressive interest rate hikes by the Federal Reserve are showing some signs of chilling an overheated economy.

The October Labor Department data shows inflation dropped from September’s 8.2% and the rate has been ticking down incrementally since hitting 9.1% in June. The drop in October was significantly larger than most economists predicted ahead of the report.

The Consumer Price Index for urban consumers rose .4% on a seasonally adjusted basis from September to October and the all items index, leaving out volatile food and energy prices, rose at a 6.3% annual rate.

Even as overall inflation reflects some easing, most basic necessities saw increases in the last month and are still significantly more expensive than this time last year.

Groceries are up 12.4% over last year, energy costs have risen 17.6%, medical care services are 5.4% more expensive and costs related to shelter have risen 6.9% since October 2021.

The Mountain West region, which includes Utah, saw inflation running at an annual rate of 9.3%, the highest regional rate in the country.

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Earlier this month the Fed raised its benchmark lending rate by .75%, marking the fourth straight increase of that size and sixth overall interest rate boost this year.

The aggressive strategy is aiming to quell inflation that has been running at or near 40-year highs for most of the past year. The rate hikes aim to raise the cost of debt for businesses and consumers which should, theoretically, reduce the amount of spending and overall economic activity, a shift in dynamics that typically brings inflation rates down. But so far, consumer spending has remained robust and the U.S. labor market has continued to run red hot, with unfilled jobs far outnumbering the number of available workers to fill them.

The October inflation numbers are not likely to suspend the Fed’s plans for continued hikes but could push the monetary body to make a smaller hike when it meets next month.

Labor Department report released last week found nonfarm payroll employment increased by 261,000 positions in October, and the unemployment rate rose to 3.7%. Notable job gains, according to the report, occurred in health care, professional and technical services and manufacturing.

Average U.S. wages also rose in October, up 0.4% from September and 4.7% over the same time last year.

But while October’s job gains outpaced the 260,000 many economists were expecting, the volume is well down from the 315,000 jobs added in September.

“Job gains were fairly widespread, and overall wage gains are still too high,” Marvin Loh, senior global macro strategist at State Street told CNBC. “So, steady as she goes from a Fed perspective, but incrementally, there’s reason to have a little hope that we’re starting to see some of the froth come out of the (jobs) market.”

And, there is evidence that other factors contributing to price increases are showing signs of relaxing.

Except for automakers, which are still struggling to acquire the computer chips they need, supply chain disruptions have largely unsnarled, per The Associated Press. Shipping costs have dropped back to pre-pandemic levels. The backup of cargo ships off the port of Los Angeles and Long Beach has been cleared.

And as declines in new rents that have emerged in real-time measures from such sources as ApartmentList and Zillow begin to be captured in the government’s forthcoming measures, that factor should also reduce inflation.