Consumers hoping for relief from surging prices may soon get it. The Consumer Price Index rose at the fastest pace in 17 years last month. Some economists say the 5.6 percent year-over-year gain marked a peak.

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Consumers hoping for relief from surging prices may soon get it. The Consumer Price Index rose at the fastest pace in 17 years last month. Some economists say the 5.6 percent year-over-year gain marked a peak.

Climbing prices eat into spending power for consumers, who are also coping with souring job and housing markets. The Department of Labor said average weekly wages, adjusted for inflation, fell 3.1 percent in July from a year ago, the biggest drop since November 1990.

Surging commodity prices lifted inflation in the past year. Energy and food make up about 10 and 14 percent of the CPI, respectively. Excluding these items, core inflation gained at a 2.5 percent rate in July over the prior 12 months. The annual rate for the producer price index, a measure of wholesale inflation, also spiked in July, coming in at a 27-year high.

Since July, however, oil prices have fallen more than 20 percent to $114 a barrel from an all-time high above $147. This, combined with slower consumer spending, should push down inflation, says FBR Capital Markets economist Steve East. He expects the year-over-year pace will slow to 4.8 percent by year-end, and to 2.1 percent by the end of 2009.

Import prices, another contributor to inflation, should also ease due to a stronger dollar, says JPMorgan economist Michael Feroli. But Feroli says the effects of high commodity and import prices might boost the CPI for the next few months, as “these sorts of trends rarely turn on a dime.”

Barclays economist Dean Maki notes price gains have spread beyond food and energy. “A key question is whether soft economic growth will create enough slack to push core inflation lower, as occurred in the early 1990s,” he writes.

Maki is not sure the economy will weaken enough to curb spending and push down core prices, though. In the early 1990s, the unemployment rate was higher while economic growth was weaker, he said.