Inflation Report Looms Amid Soaring Oil Prices and Fed Uncertainty

Today's inflation report is expected to be one of the most consequential in years, as oil and gas prices continue to soar. The Federal Reserve is considering whether to raise short-term interest rates next week, with some officials suggesting that Friday's report could swing them either way.

The Trump administration is also trying to counter voter concerns about high prices and rising interest rates ahead of the midterm elections. President Donald Trump has promised $5,000 payments to every American adult if the GOP keeps a majority in Congress, but this move would require congressional approval and could stoke inflation further.

On Friday, the government will release data showing that headline inflation ticked down to 3.3% from 3.4%, according to FactSet. However, core prices are projected to have risen by just 0.2% from July to August, and 2.4% last month from a year earlier.

Economists and Federal Reserve officials have long considered higher gas prices one of several 'one-time' shocks that are lifting inflation. However, with renewed fighting in the Middle East pushing up energy costs, it's unclear when tensions will settle down.

As a result, more expensive oil and gas could spread through more of the economy, potentially pushing up air fares, shipping costs, and even grocery prices.