Price levels actually did drop compared to June. If anything I bet people are more likely to interpret this incorrectly by believing that prices are still rising compared to last month, just at a lower rate. They are not, it's just that with a n indicator that compares current price levels to price levels a year ago it takes a while for the rate to come down, even if prices stay still or slightly decrease.
Did prices actually drop or did they just go up more slowly? 8.5% is still a price increase
8.5% is the year-on-year figure. The month-on-month figure was 0.0%, so prices neither grew nor fell on average in July.