The government says inflation cooled slightly, but the fine print points to a shrinking standard of living for most Americans.

• Inflation slipped to 3.4% in July, mostly because gas and energy prices fell.
• Wages are only growing 3.2%, so prices are outrunning pay and people are losing buying power.
• The money supply is expanding over 7% a year, hinting the real inflation rate is closer to 7-8% than the official number.
• Social Security's 2027 raise is set off these lower summer months, so 75 million recipients likely get about 3% while real costs rise much faster.
• The soft report cuts the odds of a September rate hike to roughly 40%, since the Fed has less reason to fight inflation and doesn't want to hurt jobs before the midterms.

Outlook: A rate hike next month now looks unlikely, but households and retirees should brace for costs rising faster than the official numbers admit.