U.S. inflation is cooling off, and for the first time in years it looks like the Federal Reserve might finally take its foot off the gas. According to the latest data from the Department of Labor, July’s inflation rate dipped to 2.9 percent—the slowest it’s been since March 2021. This is a major sign that those wild pandemic-era price spikes might actually be behind us. The Fed has been watching inflation like a hawk, and with these new numbers, a rate cut in September seems all the more likely.

So, what’s driving this inflation cooldown? A few factors: rent increases have started to slow, grocery costs are holding relatively steady with just a 0.1 percent bump from June to July, and gas prices are down more than two percent from 2023. Even the used car market, which went bananas during the pandemic, has seen prices drop by nearly 11 percent in the past year, according to the Associated Press.

But let’s not get ahead of ourselves. Remember that while the rate of price increases appears to be slowing, prices themselves are still about 20 percent higher than they were three years ago. So, even if your paycheck has grown, it probably still feels like you’re shelling out way more cash for just about everything.

The Fed is cautiously optimistic but not exactly ready to pop the champagne.

“We need more good data so that we can be confident that what we’re seeing is really that inflation is going back down toward 2%” the Fed Chair Jerome Powell said at a news conference last month.

If this trend continues, we might see the Fed start to ease up on interest rates in September, which could mean cheaper loans and mortgages—a welcome change for anyone trying to buy a house or finance anything big. But for now, it’s a waiting game.

In short, though inflation is cooling off, don’t expect everything to suddenly become affordable again. But hey, at least we’re moving in the right direction!