US inflation likely moderated in July, forecasts show

Economists surveyed by Reuters expect the US Consumer Price Index to have risen 0.1% in July and 3.4% year over year, according to the report due Wednesday, August 12, which will weigh on the Federal Reserve’s next rate decision.

What analysts expect

The Reuters poll of economists points to a monthly gain of 0.1% after June’s 0.4% drop, the first decline in six years. On an annual basis, inflation would ease from 3.5% to 3.4%. Core inflation, which excludes food and energy, would rise 0.2% on the month and 2.5% year over year, remaining above the central bank’s 2% target.

Why prices would ease

The moderate rise would reflect another decline in gasoline prices, which averaged US$4.064 a gallon in July versus US$4.184 in June and US$4.609 in May. Food prices would rise only slightly, while goods prices, such as furniture and clothing, would moderate as the tariff effect fades.

What comes next

The White House and markets are watching closely: softer inflation would reduce pressure on the Fed to raise rates again. Still, analysts warn risks remain tilted to the upside while the war against Iran and its impact on oil prices remain unresolved.

The key figure

3.4%. The year-over-year inflation expected for July in the US, a figure confirming the moderation in prices and one that can set the course of interest rates for the rest of the year.