July CPI Preview: Inflation Expected to Ease to 3.4%

New inflation data released on Wednesday is expected to show a slight easing in price growth, despite recent oil price volatility linked to tensions with Iran. The Consumer Price Index (CPI) is projected to rise 3.4% in July from a year earlier, down from June's 3.5% annual increase.

Economists surveyed by Bloomberg anticipate a 0.1% gain on a monthly basis, following a surprise 0.4% drop in June. Energy prices moved higher in July after a ceasefire between the US and Iran collapsed, but average prices at the pump remained slightly lower than in June, according to data from the US Energy Information Administration.

Core inflation, excluding volatile food and energy costs, is expected to be up 2.5% year-over-year and 0.2% from June. The report comes as the Federal Reserve weighs contradictory signals on inflation and employment, with recent inflation readings remaining well above the Fed's 2% target.