The release of Consumer Price Index (CPI) data for September on Thursday is expected to show that price pressures continued to ease at the end of the third quarter.
The data, released after Friday's strong jobs report, is expected to shape expectations about the size and rate of interest rate cuts by the Federal Reserve in the coming months.
Producer price data on Friday is also expected to show lower inflation.
In a note to clients, analysts at UBS noted that they do not expect this inflation data to prevent further reductions in borrowing costs by the Fed this year, after a massive 50 basis point reduction by the central bank last month.
"With inflation slowing, we expect a 50 basis point reduction by the Fed in the last two meetings of 2024, and an additional reduction of 100 basis points in 2025," the analysts reported.
They warned that the pace of this reduction could change if the recent easing of inflation stalls or the labor market remains strong, although they said this was not their main expectation.
Expectations for a sizeable cut have all but been wiped out after last week's strong US jobs report. According to CME Group's FedWatch tool, there is a 94.5% probability that the Fed will cut rates by a more traditional quarter of a percentage point, and a 5.5% chance that policymakers will choose to keep borrowing costs in the current range of 4.75% to 5.00%.
The US economy added 254,000 jobs last month, up from an upwardly revised figure of 159,000 in August, according to a closely watched report by the Labor Department. Economists had expected a reading of 147,000.
Meanwhile, the unemployment rate dropped to 4.1%. Forecasters had expected the figure to match the rate in August of 4.2%.
Average hourly wages rose by 0.4% on a monthly basis, faster than the expected 0.3% but slightly slower than August's upwardly revised figure of 0.5%.
The 30-stock Dow Jones Industrial Average hit a record close on Friday, while the tech-heavy Nasdaq Composite Index rose 1.2%, and the benchmark S&P 500 gained 51 points, or 0.9%. The gains helped the main index record its fourth consecutive positive week despite concerns about the impact of the escalating conflict in the Middle East.
