(CNN) -- Price hikes slowed more than expected in July, and, for the first time in more than three years, the Consumer Price Index has landed below 3%.

Consumer prices rose 2.9% for the 12 months ended in July, slowing from June's 3% annual gain, according to the Bureau of Labor Statistics' latest CPI report released Wednesday.

On a monthly basis, prices rose 0.2% after posting a 0.1% decline the month before.

The cost of owning and renting a home rose 0.4%. That so-called shelter index accounted for nearly 90% of the monthly increase, BLS said in the report.

Economists were expecting a 0.2% monthly increase and an annual rise of 3%, according to Fact Set consensus estimates.

Excluding gas and food, categories that tend to be quite volatile, core CPI rose 0.2% from June and saw its annual rate slow to 3.2% from 3.3%. Core CPI inflation is now running at its slowest pace since April 2021.

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