Friday's Inflation Report to Determine Fed Rate Hike Fate

A highly anticipated inflation report is set to be released on Friday, and economists are expecting it to show that consumer prices rose 3.4% over 12 months in August.

The forecast comes from a survey of economists by Dow Jones Newswires and The Wall Street Journal, which also predicts that the core index will have risen 2.4% over the year, down from a 2.5% increase in July.

The report is significant because it could determine whether the Federal Reserve raises its key interest rate at its next meeting next week.

Economists are warning that a higher-than-expected inflation reading would put heavy pressure on the Fed to raise interest rates, which would push up borrowing costs for mortgages and other loans throughout the economy.