A projected slowdown in US inflation in July could give the Federal Reserve some breathing room.

Data due this week is expected to show that U.S. consumer prices rose slightly last month, after falling for the first time in six years, in a welcome slowdown of recent war-related inflationary pressures.

The closely watched Consumer Price Index is expected to rise 0.1% in July, after falling 0.4% the previous month, according to the median estimate in a Bloomberg survey of economists ahead of Wednesday's Bureau of Labor Statistics data.

Excluding fuel and food, the core index likely rose 0.2% from the previous month. The core consumer price index is estimated to have increased 2.5% compared to July 2025, the slowest annual increase since February.

Following Friday's weak July jobs report, a slowdown in price growth may help ease some of the Federal Reserve's inflation concerns, after three officials on July 29 objected to raising interest rates.

The Consumer Price Index report is likely to show a relaxation of energy-related price pressures, which intensified in the months immediately following the outbreak of the US war on Iran at the end of February.

Gasoline prices at the pump fell to their lowest level in nearly four months in early July before rebounding to over $4 a gallon later in the month. The report may also show a decline in airfares as jet fuel costs decrease.

Bloomberg Economics experts' opinion:

The Consumer Price Index (CPI) report will be crucial. We expect the core index to fall to its lowest annual reading since March 2021. This would contradict the argument popular among Federal Open Market Committee (FOMC) hawks that inflation has remained above target for five years, and therefore the Fed needs to take drastic action.

Anna Wong, Troy Dory and Eliza Winger are economists at Bloomberg Economics.

The recent acceleration in inflation has not yet significantly slowed the economy. Government data due Friday is expected to show steady growth in retail sales in July, extending the period of robust consumer spending. On the same day, a University of Michigan survey is expected to show a decline in consumer confidence in early August for the first time in three months.