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Used car prices dropped for the first time in seven months in August, evidence that at least some of the recent inflation May be “temporary” as seen in the US economy.

Prices fell 1.4% last month after the first drop since January.

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The fall was the first for a used car component within the Consumer Price Index, which measures wholesale prices, after three months of the Mannheim Price Index’s decline. The Mannheim Index is now down 4.2% from its peak.

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“After a record-breaking rally over the past year, there has been a negative return in used car prices,” a Bank of America team led by American economist Alexander Lin wrote.

Despite the fall in August, used car prices were still up 31.9% from year-ago levels as global chip shortages fueled demand for pre-owned vehicles.

The increase in prices has also been supported by multiple rounds of stimulus checks giving consumers more cash to spend and flying from city centers to the suburbs during the pandemic.

This as rental car companies, which are typically sellers of used vehicles, need to restock their fleets after selling them to raise cash to survive the pandemic.

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Federal Reserve Chairman Jerome Powell called the conditions “the perfect storm of very strong demand and limited supply.”

The Fed used the rise in used car prices as evidence that inflation is temporary, with prices coming down as soon as the supply chain disruptions caused by the pandemic are addressed.

How much prices drop from here remains to be seen, as automakers including Ford Motor Co. and General Motors Co. have been forced to cut production due to chip shortages.

New vehicle production will decline 6% year-on-year in the second half of this year as global chip shortages persist into 2022, 3M CFO Manish Patolawala said at a Morgan Stanley conference on Monday.

Analysts say the moderation in used car prices is likely to continue as retail prices are usually a few months lower than what dealers would pay.

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However, there are concerns that the price drop will be temporary as “some measures of forward inflation expectations are reaching their highest level in a decade,” said Rick Ridder, chief investment officer for global fixed income at BlackRock.

A survey published Monday by the Federal Reserve Bank of New York found that prices are expected to rise 5.2% a year from now.