Beef was prepared for a customer in a grocery on July 22, 2025 in Miami, Florida.
Joe Raedle | Getty pictures
The most important inflation reports this week are expected to prove that prices were accelerated again in August, but not in a way that would prevent the Federal Reserve from reducing their benchmark interest rate at one meeting next week.
The Bureau of Labor Statistics is scheduled to publish the producer price index for August on Wednesday, followed by the consumer price index observed the next day.
Economists expect the reports to show monthly increases of 0.3% all along the line, including the indexes of the heading of all-items and the critical core values that, according to Dow Jones, exclude the volatile food and energy prices.
If this is the case, it would increase the annual CPI rate of the annual heading to 2.9%, the highest level since January and further from the target of the Fed 2% and compared to July by 0.2 percentage points. At first glance, this seems to be a deterrent for the FED to make monetary policy easier if it meets next week.
However, two factors will come into play: First, the core value process is expected to be unchanged at 3.1%. Second, the increase in inflation is largely expected from tariff-sensitive goods and not from service prices, which affect a much larger part of the US dollar.
If these trends are recognizable in the report, the political decision -makers of the central bank are expected to search the increase and to focus more on the increasingly weak job market, which could use a thrust through lower installments. Fed civil servants see the tariffs for the time being, since a one -time price is increased, which is probably no longer causing.
“Overall, it is still hotter than the Fed would like to see,” said James Knightley, head -international economist at Ing. “You will look at the wider picture. The USA is mostly a service industry.”
Of course, President Donald Trump’s tariffs will probably continue to appear in the form of price increases for articles such as cars, furniture and clothing.
“Apart from the warfect, however, we expect the underlying trend inflation to continue to decrease, which reflects the shrinking contributions to the housing and labor markets,” said Goldman Sachs economist in a note.
However, this is a double -edged sword for the economy, since consumers believe that the emergency values and wages that do not rise so quickly do not rise and offer further incentive for interest rate cuts.
“If you have this combination, concerns about prices, concerns about income, concerns about prosperity, these three things for growth history are quite toxic,” said Knightley. “It starts to make the Fed more careful where we are going.”
The producer prices reporting in front of the CPI are considered an indicator of pipeline pressures. Despite the increase of 0.9% in July, the increase is expected to be mitigated in August.
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