End of surging inflation may be in sight, but other risks are popping up.

Economists like to say the cure for high prices is high prices.

In other words, consumers eventually start to hold back on spending when they are faced with increasing costs.

Now, mounting evidence suggests that phenomenon may be putting an end to the bout of surging inflation that has hit wallets since the pandemic gripped the U.S., causing a cumulative 22% increase in the overall consumer price index from June 2020 to June 2024.

Wednesday morning, the Bureau of Labor Statistics will release its latest CPI data for July. Economists expect a 12-month reading of 3%, the same as June’s.

While that would still be above the Federal Reserve’s official 2% target, signs abound that it is unlikely to stay at that level for much longer.

On Monday, the New York Federal Reserve reported that consumers’ three-year inflation outlook hit a record low.

And in their latest earnings reports, many companies across the corporate spectrum have signaled they are lowering prices or offering discounts in response to consumers who have grown increasingly hesitant to spend money.

“We’re seeing lower average selling prices … right now because customers continue to trade down on price when they can,” Amazon CEO Andrew Jassy said on the company’s earnings call this month.

Meanwhile, McDonald’s executives have said they plan to extend their recently launched $5 meal deal promotion because of favorable response from customers who now see $5 as a bargain.

In fact, key consumer categories of the CPI have already dipped below 2%, including gas and grocery prices. And most of the increase that made up the 22% gain in pandemic-era inflation occurred from 2020 to 2022; last year, the total CPI increased by roughly 3.5%.

Many economists credit the Federal Reserve’s decision to raise interest rates starting in the spring of 2022 with helping to curb the upswing. By making it more expensive to borrow money, the Fed sought to slow demand for goods and services and thus make it harder for businesses to raise their costs — another manifestation of the figurative high-prices “cure.”

It is likely that a weakening labor market has also been contributing to consumers’ cost fatigue. The BLS reported this month that the unemployment rate had unexpectedly climbed to 4.3% — a level not seen since the summer of 2017.

“Amid increasingly worrisome conditions in the labor market, we expect the Fed to consider inflation is close enough to its target and embark on a rate cutting cycle at its next meeting,” economists at Wells Fargo wrote in a research note this month.

And many other parts of the economy, including housing costs, child care and insurance, continue to soar higher. While only housing costs account for a significant weight for the overall CPI — and, indeed, are largely responsible for keeping it above 2% — families in the U.S. continue to struggle to maintain their desired standard of living. A recent Gallup Poll found 46% of respondents describing current U.S. economic conditions as “poor” — the prevailing response for the 29th straight month. And the New York Fed’s survey has found the share of respondents describing their financial situation as “somewhat better off” has declined for eight straight months.

A confluence of factors, including ongoing shortages in key job roles, changes in consumer behavior and even climate change, have all contributed to elevated price growth in affected categories.

Yet even there, there are already signs of easing thanks to the resetting of annual increases for insurance premiums, lower commodities prices and the weakening jobs market.

It is that last factor that the Federal Reserve is keenly focused on. While the central bank has signaled it is likely to lower interest rates at its next meeting in September, if job losses begin to mount rapidly, it may have to act more aggressively.

“Federal Reserve officials have reason to be increasingly concerned about softening of the job market, the other part of its dual mandate of stable prices and maximum employment,” Bankrate Senior Economic Analyst Mark Hamrick said in a release.

“If and when a recession materializes, layoffs increase and more individuals and households suffer damaging interruptions in employment and incomes,” he said.