Inflation is expected to cool again in today's July CPI report

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We're about to find out if inflation continued to cool off.

The Bureau of Labor Statistics will publish the July consumer price index report at 8:30 a.m. ET. Inflation slipped to 3.5% in June, the lowest rate since March and cooler than the expected 3.8%. The consensus forecast for July is a modest cooling down to 3.4%.

"Forces eroding inflation include rising rental vacancy rates that are restraining rent growth, a less onerous tariff regime than a year ago and moderating wage gains," David Kelly, chief global strategist at J.P. Morgan Asset Management, said in commentary. "However, the pace at which inflation declines depends on how long it takes to return to normal traffic through the Strait of Hormuz."

A key comparison to watch is whether inflation outpaced wage growth for the fourth straight month. Wage growth slowed to 3.2% over the year in July, the lowest increase since 2021.

"Even if you're making more money numbers-wise, with the way prices are rising, you have less money left over at the end of the month," ZipRecruiter economist Nicole Bachaud told Business Insider. "That's really going to impact the large consumer base of America, middle- and low-income households, who are really dependent on wage growth to help them remain economically viable."

Energy is one big category to watch in today's report as the Iran war and its effects on the oil market continue. Growth in the energy price index cooled to a year-over-year rate of 15.7% in June from a 23.5% peak in May.

The new price data comes after Friday's dismal jobs report, which showed the US shed jobs in July. Downward revisions showed around 100,000 fewer jobs were created over the previous two months than was previously reported. Unemployment and overall labor force participation dropped, while prime-age labor force participation ticked up.

Cory Stahle, senior economist at the Indeed Hiring Lab, said several data sources showing anemic wage growth and weak hiring together indicate that employers aren't "necessarily pulling out the stops to try to attract workers" because there isn't pressure to do so. He added that companies may be prioritizing health benefits over wage increases.

There will be another CPI report out before the Federal Open Market Committee meets in mid-September to determine what to do next with interest rates. On Tuesday afternoon, CME FedWatch showed about a 50-50 chance of a hike or unchanged rates, based on interest rate traders' expectations.

This is a developing story. Please check back for updates.

Madison Hoff is a reporter on Business Insider’s economy team. She covers the labor market, inflation, spending, and other data. In addition to covering new estimates and trends, her workforce reporting includes career pivots, job searching, and side hustles.She also covers downsizing, particularly people selling their houses to pursue RV living. She has also reported on how much teachers spend out of pocket and what it’s like being a caregiver.Her stories often cover the state of the economy, what experts are saying, and how people are navigating the workplace or their careers.Previously, she was a junior reporter and data editorial fellow on the Strategy team.A few of her stories: