Inflation Reports Set to Fuel Market Volatility

Wall Street will be closely watching two key inflation updates this week as it tries to gauge the direction of inflation and its impact on households and businesses.

The Producer Price Index (PPI) report for August is set to be released on Thursday, providing details on prices for businesses before they pass along costs to consumers. The PPI will help give Wall Street and the Federal Reserve a clearer picture of inflation's direction at the wholesale level.

On Friday, the Consumer Price Index (CPI) report for August will be released, which is closely watched and provides details on price changes for specific grocery items, furniture, clothing, and services such as car maintenance and restaurant dining. The CPI also gives insight into inflation's impact on households and businesses.

The reports come at a time when the rate of inflation remains above 3% and is putting more strain on households and businesses. Rising energy prices due to the U.S.-Iran conflict have been fueling inflation, while ongoing tariff conflicts between the U.S. and most of the world also threaten to send prices higher.

The Federal Reserve has been holding its benchmark interest rate steady but expects to raise it at least once this year to help fight inflation. The Fed's goal is to cool inflation to a rate of 2%.