Gas prices have eased from mid-summer highs and supply chain issues are easing, helping to lower the cost of imported goods and parts.

WASHINGTON — A high-profile inflation report due out Tuesday morning may indicate that another month of cooling prices and add evidence that the pressure on American households is gradually easing.

A softer inflation report would also fuel optimism that the Federal Reserve will pause its activities increasing interest rates sometime early next year.

Economists forecast that consumer prices rose 7.3% in November from a year earlier, according to data provider FactSet. While still uncomfortably high, it will fall well below the recent peak of 9.1% in June and equal the fifth consecutive year-over-year slowdown in inflation.

Gas prices have fallen from their mid-summer highs and are now lower than they were a year ago. Many supply chains are broken, helping to reduce the cost of imported goods and spare parts. Prices for lumber, copper, wheat and other goods also fell.

Fed officials and economists will focus more on Tuesday’s monthly inflation readings to better understand where prices may be heading. Prices are expected to rise 0.3% from October to November, extending the slowdown. On a month-over-month basis, inflation rose 1% in May and 1.3% in June, but averaged just 0.2% over the past four months.

For some economists and Fed officials, the numbers are a sign of improvement, even as inflation remains well above the central bank’s annual target of 2% and may not reach it until 2024.

Fed Chairman Jerome Powell said he was tracking price trends in three different categories to better understand the likely path of inflation: goods, excluding volatile food and energy costs; housing, which includes rent and home ownership; and services other than housing such as auto insurance, pet services and education.

In a speech two weeks ago in WashingtonPowell noted that some progress has been made in easing inflation in goods and housing, but not in most services. Physical goods such as used cars, furniture, clothing and appliances have been steadily falling in price since the summer.

Used car prices, which soared 45% in June 2021 from a year earlier, have been falling for most of this year. In October, their prices grew by only 2% year-on-year.

Home prices, which account for nearly a third of the consumer price index, continue to rise. But real-time measurements of apartment rents and house prices are starting to fall after prices soared at the peak of the pandemic. Powell said those drops are likely to show up in government data next year and should help lower overall inflation.

However, the cost of services will likely remain high, Powell suggests. Partly because it’s skyrocketing wages become a key factor in inflation. Service businesses, such as hotels and restaurants, are particularly labor intensive. And when the average salary is growing rapidly by 5-6% per year, the price pressure in this sector of the economy continues to grow.

Service businesses tend to pass on some of their higher labor costs to their customers by charging more, thereby supporting inflation. Higher pay also boosts consumer spending, allowing companies to raise prices.

“We want wages to grow strongly,” Powell said, “but they have to rise at a level consistent with 2% inflation over time.”

On Wednesday, the Fed is likely to raise rates for the seventh time this year, further raising borrowing costs for consumers and businesses. Still, the central bank is expected to raise its key short-term rate by less than half a point after four consecutive three-quarter point hikes. That would leave its base rate in the range of 3.75% to 4%, the highest level in 15 years.

Economists expect the Fed to further slow rate hikes next year with quarter-point increases in February and March if inflation remains relatively low.

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