WASHINGTON - Inflation is expected to have moderated last month amid falling gas prices, giving consumers some relief, even though renewed conflict with Iran has driven oil prices up again.

The government's upcoming inflation report, scheduled for release on Tuesday, is projected to indicate that consumer prices fell 0.2% in June, based on a FactSet survey of economists. This would mark the first monthly drop in almost four years. On an annual basis, prices are anticipated to have increased 3.9%, easing from the 4.2% rate recorded in May.

Gas prices have dropped further in July, hinting that inflation might decline again in the following report. Nevertheless, these improved figures are unlikely to alleviate ongoing worries about affordability, which pose a political challenge for the Trump administration ahead of midterm elections. Inflation remains elevated compared to pre-conflict levels of 2.4%.

The Middle East situation shifts rapidly. On Monday, Brent crude oil prices, the global benchmark, surged 9.6% to $83.30 after the United States and Iran both claimed control over the Strait of Hormuz.

Higher gas prices have also increased airfares. By raising diesel costs, they have added to shipping expenses for groceries and other products.

Analysts will examine factors beyond fuel costs. World Cup events across 11 U.S. cities are likely to have increased hotel rates, according to economists. New and used vehicle prices are projected to have declined. However, costs for numerous services such as dining out, entertainment, and medical care continue to rise faster than pre-pandemic trends.

Excluding volatile food and energy items, core prices are forecast to have climbed 0.2% in July from the prior month and 2.8% year-over-year, per FactSet. Sustained monthly gains at this pace through year-end would move core prices, closely watched by the Fed, closer to its goal.

A slowdown in inflation might reduce pressure on the Federal Reserve to increase its benchmark rate, typically used to temper spending and price growth. Chair Kevin Warsh, who assumed the role on May 22, has emphasized the Fed's focus on returning inflation to its 2% target, though he has not indicated upcoming actions.

Other Fed officials have cautioned that inflation has exceeded the target for over five years, and without clear evidence of decline, a rate increase may be required. John Williams, president of the Federal Reserve Bank of New York, noted last week that core inflation rising at 0.2% monthly or less for the remainder of the year would align with easing price pressures.

Many officials have highlighted that large-scale investments in artificial intelligence infrastructure could intensify inflation by increasing demand for memory chips, other semiconductors, and electricity. Consequently, firms including Apple, Microsoft, and Dell have raised prices on laptops, tablets, and gaming consoles.

On Monday, Fed governor Christopher Waller expressed concern over core inflation, which rose from 3% last December to 3.4% in May using the Fed's preferred measure based on consumer price index data. He noted that more than two-thirds of service costs have increased by 3% or more compared to a year earlier.

Waller had supported rate cuts earlier this year but now warns that an increase might be necessary.

"If we get another hot reading on core inflation this week, then the (Fed) will need to consider tightening monetary policy in the near term," Waller said during a New York speech.

Gas prices have dropped nearly 20% from their late-May peak but rebounded recently, likely due to fresh Middle East tensions. Nationwide, prices averaged $3.87 per gallon on Monday, up 7 cents from the prior week and down from $4.09 a month earlier, according to AAA.

Other indicators of price trends are mixed. The Federal Reserve Bank of New York reported last week that nearly half of surveyed regional companies paying tariffs intend to raise prices further.

Separately, Walmart announced last week price reductions on thousands of products, including ground beef, potato chips, toys, and apparel. President Donald Trump commended the action on social media and claimed credit, though the retailer made no reference to him in its statement.