US Inflation Report Due Out, Expected to Show Slight Cooling

The latest inflation report is due out Wednesday and it could provide crucial signs of where prices are headed. The report will be closely watched by the Federal Reserve as well as Republicans facing tough midterm elections, not to mention consumers still struggling with high grocery prices.

Americans have been grappling with worsening inflation since early last year, after tariffs lifted the cost of imported goods. Then this spring, the Iran war raised oil and gas costs, pushing inflation to its highest level in three years. The AI buildout has also increased prices for computer chips and electronic equipment.

The report is expected to show that consumer prices rose 3.4% in July from a year earlier, down from 3.5% in June and lower than the recent peak of 4.2% in May. On a monthly basis, prices are expected to have risen just 0.1% from June to July.

A big reason inflation has cooled in the past couple of months is that gas prices fell after a cease-fire was reached in the U.S.-Iran war. However, gas prices rose again in late July and earlier this month, meaning inflation could pick up again when August's figures are released next month.