* Dollar index drops 1.1 pct
* CPI index flat in July vs 0.2 pct rise in June
* Futures down: Dow 28 pts, S&P 3.75 pts, Nasdaq 7 pts (Adds details, comments, updates)
By Yashaswini Swamynathan
Aug 16 (Reuters) - Wall Street was set to open slightly lower on Tuesday after New York Federal Reserve President William Dudley said an interest rate hike in September was possible.
"We're edging closer towards the point in time where it will be appropriate I think to raise interest rates further," Dudley, a permanent voting member of the Federal Reserve, said in an interview on Fox Business Network.
Dudley's comments raised expectations among traders of an interest rate hike this year. They now see a 12 percent chance of a hike in September, up from 9 percent before Dudley's comments.
That measure increased to 37.8 percent from 37.4 percent for December, according to CME Group's FedWatch tool.
The minutes of the Federal Reserve's July meeting, expected to be released on Wednesday, will offer further clues on when the central bank would be able to raise rates and its take on the health of the economy.
However, data showed U.S. consumer prices were unchanged in July as the cost of gasoline fell for the first time in five months and underlying inflation moderated.
The dollar index slipped to its lowest level this month after San Francisco Fed President John William said central banks might have to raise inflation targets, focus more on growth and back much looser fiscal policy in future.
"We're looking for a slightly lower opening today as the dollar comes under pressure," said Peter Cardillo, chief market economist at First Standard Financial in New York. "What we are seeing here is a market that is technically overbought and is looking for some sort of an excuse to pause a bit."
A report on industrial production is expected at 9:15 a.m. ET.
Dow e-minis were down 28 points, or 0.15 percent at 8:33 a.m. ET, with 17,738 contracts changing hands. S&P 500 e-minis were down 3.75 points, or 0.17 percent, with 141,302 contracts traded. Nasdaq 100 e-minis were down 7 points, or 0.15 percent, on volume of 18,322 contracts.
Wall Street closed at record highs on Monday as commodity stocks rose on the back higher oil prices and a weak dollar.
Oil prices continued to trade at 5-week highs on Tuesday, fueled by talk of producers taking action to prop up the market.
Dow component Home Depot's shares rose 0.5 percent in premarket trading after the company raised its full-year earnings forecast.
Hain Celestial plunged nearly 24 percent to $40.70 after the company said it would delay the release of its fourth-quarter results.
Specialty chemicals distributor Univar fell 7.3 percent after the company announced the sale of about 21 million shares. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty)