NEW YORK — The July Consumer Price Index report is forecast to show a rebound in inflation after an unexpected decline in June, with consensus estimates from FactSet projecting overall CPI to rise 0.1 percent month-over-month and 3.4 percent year-over-year.

That follows June's -0.4 percent monthly decline and a 3.5 percent annual rate. Core CPI, which excludes food and energy, is expected to rise 0.2 percent for July and 2.5 percent from year-ago levels, according to FactSet consensus.

Energy prices present a mixed outlook. Gas prices fell early in July but resumed an upward trend later in the month during renewed fighting in the Iran war and uncertainty over traffic through the Strait of Hormuz. Despite that volatility, economists forecast a net 2 to 3 percent decline in gas prices for the July reading.

Stephen Juneau, an economist at Bank of America, said oil volatility persisted throughout July. His forecast calls for a 0.1 percent increase in overall CPI and a 0.2 percent gain in core CPI.

Core goods inflation is expected to remain subdued, though core services likely rebounded toward more typical trend levels after their June decline. Deutsche Bank forecasts a 0.15 percent rise in overall CPI and a 0.26 percent gain in core inflation.

LPL Financial chief economist Jeffrey Roach described the upcoming report as a "mixed bag." He expects a 0.1 percent monthly CPI increase and a 3.4 percent annual rise, with core CPI up 0.2 percent monthly and 2.5 percent annually. Roach said price deceleration is likely in durable goods — including new and used cars — and financial services and insurance, while healthcare and transportation fuel costs may push in the other direction.

Pooja Sriram, a U.S. economist at Barclays, said the July CPI data are critical for markets and policymakers, coming after a soft July payrolls report that eased concerns about accelerating economic activity.

Federal Reserve officials are expected to weigh July and August inflation readings heavily. Vanguard economist Adam Schickling said inflation has been "stickier and persistent," though he believes it is trending toward the Fed's 2 percent target.

JPMorgan chief U.S. economist Michael Feroli expects July core CPI to rise approximately 0.22 percent month-on-month — a level he said is insufficient to prompt the Fed to raise rates in September.

If the report aligns with forecasts, Treasury yields will face renewed upward pressure. A 0.1 percent headline gain and a 0.2 percent core print would reinforce the sticky inflation narrative, forcing a repricing of the short end of the yield curve and adding duration risk to bond portfolios.

If disinflation unexpectedly continues, it would cement expectations for the Fed to hold rates, anchoring long-term inflation expectations and flattening the curve. The critical variable either way is core services — any deviation there will drive the bond market's recalibration ahead of the next Fed meeting.