US Braces for Pivotal Inflation Report as Fed Rate Hike Looms

The US is bracing for an inflation report that may push the Federal Reserve to hike interest rates for the first time in over three years. The Labor Department's consumer price index (CPI) report, due on Friday, will be closely watched as it shows how costs are filtering through the world's biggest economy.

The data comes after wholesale inflation rose this week, and analysts believe a steady or higher inflation figure, particularly when volatile components are excluded, could nudge the Fed in the direction of raising interest rates. The policymakers meet next week.

President Donald Trump has called for lower interest rates, but his approval rating is languishing due to persistent inflation and the unpopular war with Iran. He even made a surprise threat to cut trade ties with certain countries if they don't comply with US demands.

Economists expect consumer inflation to come in at 3.4 percent year-on-year in August, which would be the same rate as in July but still significantly above the Fed's longer-term 2.0 percent inflation target.