Inflation expected to cool slightly in July report as issue becomes key issue in presidential campaign
Bahnsen Group managing partner David Bahnsen analyzes the Feds plan to reduce inflation on Varney & Co.
A closely-watched inflation report is due to be released Wednesday morning and is expected to show that inflation has continued to ease as the issue comes to the forefront of the presidential race and the Federal Reserve eyes a potential interest rate cut as soon as next month.
Economists expect the consumer price index (CPI) – which measures a range of goods including gasoline, health care, groceries and rent – to show that prices rose 2.9% year-over-year, according to a consensus forecast by Trading Economics. That would be down slightly from the 3.0% inflation reading in June, though analysts at Trading Economics see inflation holding steady at 3.0%.
On a monthly basis, inflation is seen rising slightly by 0.2% after it fell by 0.1% in June. Core inflation, which excludes volatile food and gasoline prices, is expected to cool slightly to 3.2% year-over-year based on the consensus forecast.
Those figures are above the Federal Reserve's target rate of 2%. However, Fed Chair Jerome Powell has signaled that the central bank may move to cut interest rates before inflation falls to that level if data like Wednesday's inflation report shows the cooling trend is continuing.
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Economists' forecasts expect inflation to hold steady at 3% year-over-year, (Photo by Liao Pan/China News Service/VCG via Getty Images / Getty Images)
Powell said in remarks last month at the Economic Club of Washington D.C. that waiting for inflation to reach 2% could result in an excessive tightening of economic activity that leads to policymakers overshooting their target.
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