Diesel Prices Fuel Inflation Fears Ahead of August CPI Report

The recent surge in diesel prices has become a major concern for US inflation doves, particularly ahead of Friday's August CPI report.

Last week, diesel fuel hit record highs, which is significant because it's crucial for transportation, shipping, farming, and manufacturing.

Market analysts are keeping a close eye on the impending CPI release, as any rise in core inflation above 0.2% would likely put pressure on the Federal Reserve to hike interest rates this month.

Fed funds futures currently indicate around 57% probability of a September rate increase, 70% for October, and full pricing for December.