After a week of key jobs reports, inflation data is returning  to the spotlight this week with Wednesday’s release of the U.S. June Consumer Price Index (CPI) and the Producer Price Index the following day.

Investors will be looking for declines that could justify the U.S. central bank reversing course on its intent to raise interest rates 25 basis points (bps). A return to monetary hawkishness would follow the Federal Reserve pausing rate hikes last month for the first time in more than a year. The Fed’s prescription has helped cut the CPI from 9% in August 2022 to May’s 4% reading, although it has more recently also raised concerns about an overstep that could cast the economy into a steep recession.

On Wednesday, observers of U.S. monetary policy will eye the Labor Department’s release of the June CPI. The CPI has edged steadily downward since last year’s high. Economists’ consensus see June’s index dipping in the mid 3% range, although Edward Moya, senior market analyst at foreign exchange market maker Oanda, wrote in a Monday note that it could tumble to 2.8%. Yet Moya also noted that core inflation, which excludes more volatile food and energy costs, could remain hot, a result of an expensive housing market. “Pricing pressures might remain throughout the summer,” Moya wrote.

The PPI, which measures price changes at the wholesale level, often foreshadows changes that consumers face in the future. The May PPI sank to 1.1% annually, beating expectations for a 1.5% decline and down sharply from the previous month’s 2.3% reading. The consensus is for a 0.4% reading in June.

Also on Thursday, the U.S. Labor Department announces jobless claims for the week ending July 8. Recent jobs data has offered slightly different perspectives on the state of the state of the jobs market. Last week’s ADP report showed businesses adding almost a half-million private sector jobs, more than double economists’ expectations. The unexpectedly strong results offered support for the Fed to reapply its aggressive inflation treatments. A strong employment market suggests that the economy is expanding, which often precedes higher prices. But an unexpected – albeit slight – increase in jobless claims the same day and mild nonfarm jobs report later in the week added nuance to the overall picture.