US July CPI inflation report preview

The U.S. Labor Department is set to release the Consumer Price Index (CPI) report for July on Wednesday, August 12, 2026. Economists polled by Reuters expect the headline CPI to have rebounded 0.1% in July after a 0.4% decline in June, the first drop in six years. On a year-over-year basis, the CPI is forecast to have risen 3.4%, down from 3.5% in June. Core CPI, excluding food and energy, is expected to have increased 0.2% month-over-month and 2.5% year-over-year. The anticipated moderate increase is attributed to a further decline in gasoline prices, which averaged $4.064 per gallon in July, down from $4.184 in June. Food prices likely rose marginally, while goods prices, including furniture and apparel, are expected to contribute to the rise. The report follows news of surprise job losses last month and comes amid ongoing U.S.-Israeli conflict with Iran, which has kept inflation risks tilted to the upside. The United States — Federal Reserve, which targets 2% inflation based on the Personal Consumption Expenditures (PCE) price index, may see cooler CPI readings temper expectations for rate hikes this year. However, some economists still expect the Fed to tighten monetary policy in September, as core PCE inflation is forecast to rise 0.2% in July, matching June's year-over-year increase of 3.3%. The high cost of living has negatively affected consumer sentiment and could impact the Republican Party's chances in the November midterm elections.