July's Consumer Price Index (CPI) is projected to show a 2.8% annual increase, up from June's 2.7%, marking the highest inflation rate since February. This rise, partly attributed to tariffs increasing import costs passed onto consumers, puts the Federal Reserve in a difficult position. They must decide between lowering interest rates to stimulate the economy or keeping them high to combat inflation. The Fed's September meeting will be crucial as they weigh the risk of reigniting inflation against the risk of recession.

Prepared by Christopher Adams and reviewed by editorial team.