The U.S. Labor Department's CPI data, due at 8:30 am ET, is expected to show prices increased by 7.3% year-on-year last month, moderating from a 7.7% rise in October.
The core rate which excludes volatile food and energy prices is expected to have increased 6.1%, after a 6.3% rise in October.
Money market participants now see an 89% chance that the Fed will increase the benchmark rate by 50 basis points on Wednesday, with the rates peaking in May 2023 at 4.98%.
Fears that the Fed's aggressive policy tightening will tip the economy into a recession have pushed the benchmark S&P 500 down 16.3% this year.
Still, the index has rallied off its October lows on hopes that the Fed would slow the pace of its rate hikes.
"Needless to say, a lower or an in-line (CPI) reading could keep the market rebound we have seen since end of September alive," analysts at J.P. Morgan said in a note.
"The downside on a higher than expected print however could be significant as it could reignite concerns over further Fed hawkishness, especially as it would come on the heels of recent stronger than expected macro data releases."
The CBOE volatility index, also known as Wall Street's fear gauge, touched a near one-month high of 25.73 points.
At 6:16 a.m. ET, Dow e-minis were up 145 points, or 0.43%, S&P 500 e-minis were up 17 points, or 0.43%, and Nasdaq 100 e-minis were up 55 points, or 0.47%.
Most rate-sensitive stocks including Meta Platforms Inc, Alphabet Inc, Nvidia Corp and Tesla Inc gained between 0.7% and 1.7% in premarket trading.
Oracle Corp jumped 2.7% on better-than-expected quarterly revenue while Pinterest Inc gained 3.7% after Piper Sandler upgraded the social media platform's stock to "overweight" from "neutral".
(Reporting by Shubham Batra and Ankika Biswas in Bengaluru; Editing by Vinay Dwivedi)
