US CPI Report Expected to Show Moderate Price Increase

US consumer prices likely increased moderately in July, which could reduce expectations for a Federal Reserve interest rate hike this year. The Labor Department's Consumer Price Index report is expected to show a rebound of 0.1% after falling 0.4% in June.

Economists point out that the US position as a net oil exporter and drawing down of petroleum inventories have cushioned the impact of the oil price shock sparked by the Middle East conflict. However, they view inflation risks as tilted to the upside due to unresolved tensions between the US and Iran.

Gasoline prices averaged $4.064 a gallon in July compared to $4.184 in June, contributing to the expected small monthly increase in the CPI. Food prices are also likely to have increased marginally, while goods prices, including household furniture and apparel, will account for the moderate rise in the CPI.

Tani Fukui, an economist at MetLife Investment Management, noted that 'it's an improvement, but both of those numbers are still extremely high and unpleasant for consumers.'