The US Labor Department says the consumer price index in August was up 2.5 percent from a year earlier.
It says that is the smallest 12-month increase since February 2021.
In monthly terms, the figure slid 0.4 percentage points from July and has now shrunk for five straight months.
By item, transportation costs rose 7.9 percent and housing costs increased 5.2 percent. Used vehicle prices dropped 10.4 percent and gasoline prices fell 10.3 percent.
The index for all items except the volatile food and energy categories was up 3.2 percent, the same rate of increase as the previous month.
The Federal Reserve has maintained its key interest rate above 5 percent for more than a year. Slowdowns are seen in the housing, labor and other markets.
Many analysts are expecting the Fed to reduce the rate at its policy meeting next week. That would be the first cut in four-and-a-half years.
The focal point is whether the cut will be the usual 0.25 percentage points or 0.5 points.