US Inflation Rate Expected to Slow for 2nd Month

The annual inflation rate in the US is expected to slow for a second consecutive month to 3.4% in July 2026, from 3.5% in June, easing further from the 2023 high of 4.2% reached in May. On a monthly basis, the CPI is forecast to rise 0.1%, rebounding from a 0.4% decline in June, which marked the first monthly drop since May 2020. Gasoline prices are expected to have fallen nearly 3%, while airfares and jet fuel prices are also likely to have declined. New and used car prices, meanwhile, could see a slight uptick. Core consumer prices are expected to rise 0.2%, following a flat reading in June, while the annual core inflation rate is seen easing to 2.5% from 2.6% in the previous month. That would mark the smallest annual increase since February. Overall, the CPI report is likely to point to a further cooling in energy-related price pressures that intensified in the months immediately following the start of the US war with Iran.

The annual inflation rate in the US fell to 3.5% in June 2026, the first decline in five months, compared to 4.2% in May and below forecasts of 3.8%. Energy costs increased 15.7%, below 23.5% in May, as the ceasefire between the US and Iran alleviated inflationary pressures from the energy component. Gasoline prices rose 26.7% (vs 40.5% in May) and fuel oil increased 42.9% (vs 58.9%). Inflation also slowed for shelter (3.3% vs 3.4%) and food (3% vs 3.1%). Compared to the previous month, the CPI decreased 0.4%, more than forecasts of a 0.1% drop, and the largest fall since April 2020. Energy costs declined 5.7%, after rising 3.9% in May, 3.8% in April, and 10.9% in March, with gasoline dropping 9.7%. The fall in energy more than offset increases in other indexes including those for shelter (0.1%) and food (0.2%). Meanwhile, annual core inflation eased to 2.6% from 2.9%, below forecasts of 2.8%. Compared to the previous month, core CPI steadied, compared to forecasts of a 0.2% rise.

The annual inflation rate in the US is expected to ease to 3.8% in June 2026 from 4.2% in May, marking its first slowdown in five months after reaching its highest level since April 2023. On a monthly basis, the CPI is forecast to edge down 0.1%, which would be the first decline since May 2020, largely reflecting lower energy prices. Gasoline prices are estimated to have fallen by approximately 9% following the ceasefire between the US and Iran, alleviating inflationary pressures from the energy component. Moderate increases are expected in airfares and rents, while prices for services, particularly hotel and motel accommodations, are likely to rise amid increased demand related to the FIFA World Cup. Motor vehicle insurance prices are also expected to rebound. Meanwhile, core consumer prices likely rose 0.2% for a second consecutive month, leaving the annual core inflation rate unchanged at 2.9%.