What To Expect From Wednesday’s Inflation Report
What To Expect From Wednesday’s Inflation Report
Staff AuthorTue, August 11, 2026 at 5:00 PM UTC
0
Slowing inflation could be giving shoppers a break, if this week’s CPI report comes in as economists expect.Credit: Allison Joyce / Bloomberg via Getty ImagesKey Takeaways -
Inflation likely slowed in July as gasoline prices fell amid a lull in the war in Iran.
Decelerating price increases would be a welcome respite for the economy and consumers after years of higher-than-usual inflation.
Slowing “core” price increases would give the Federal Reserve breathing room to avoid raising interest rates to stamp out high inflation.
Consumers and the economy likely got a bit of a break on prices this summer, if forecasters are correct.
Economists expect a report scheduled for Wednesday will show inflation rose 3.4% over the year in July, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. That reading of the Consumer Price Index would be a deceleration from 3.5% in June.
The “core” index, which excludes the volatile prices of food and energy, is expected to have risen 2.5% over the year, down from 2.6% in June and reaching its lowest since February.
A report in line with expectations would mark a second straight month of deceleration. It could be taken as an encouraging sign that inflation may be returning to a downward trajectory.
What This Means For the Economy
If sustained, cooling inflation would give breathing room to household budgets battered by years of inflation running above the Fed’s target of a 2% annual rate and improve the outlook for consumer spending and economic growth.
Advertisement
Inflation that surged in the wake of the pandemic in 2021 had fallen until early 2025, when the dual shocks of tariffs and later the Iran war pushed inflation measures well above the Federal Reserve’s goal of a 2% annual rate.
Cooling core inflation would be especially welcome news for policymakers at the Federal Reserve. Economists view core indices as more reliable guides to broad inflation trends.
In recent months, a growing number of Federal Open Market Committee members have indicated they’re losing patience with inflation running above 2% for a fifth year. Some are even advocating raising the central bank’s key federal funds rate to push up borrowing costs and curb inflation pressures.
Rate hikes could be averted if inflation is tamed without intervention. Falling fuel prices in July, amid a lull in the Iran war, have likely helped keep inflation from rising too much, economists said.
Forecasters are also looking for decreases in several other categories. Air fares could fall as a result of falling jet fuel costs and hotel rooms could be cheaper after the World Cup ended, Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, said in a commentary.
on Investopedia
Source: “AOL Money”
