July inflation report could shape rate and mortgage expectations

The federal government is set to release July’s Consumer Price Index at 8:30 a.m. Eastern on Wednesday, Aug. 12, giving consumers and investors a new reading on inflation after a volatile stretch for prices.

The most recent CPI report showed consumer prices were 3.5% higher in June than a year earlier, while prices fell 0.4% from May to June after seasonal adjustment. Food prices remained 3% higher than a year earlier.

Analysts expect overall prices to have risen about 0.1% from June to July, with core prices up about 0.2%. Expectations center on annual inflation of about 3.4%, down slightly from June, and core inflation near 2.5%.

The report could affect expectations for Federal Reserve interest-rate decisions, financial markets and borrowing costs. Mortgage rates were around the upper-6% range Tuesday for a 30-year fixed loan, adding pressure for buyers already facing elevated home prices.

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