CPI Week Guide: What U.S. Inflation, PPI and Sentiment Mean for a September Fed Rate Cut

The U.S. economy faces a pivotal data stretch that could lock in the Federal Reserve’s next move. After August’s jobs report showed payroll growth of just 22,000 and unemployment at 4.3%, markets shifted decisively toward a September rate cut. Whether policymakers stick to a measured 25 basis points or consider a larger “front-load” hinges on how this week’s inflation and demand signals land—and on how tariff uncertainty colors the price outlook.
Here’s the roadmap. Monday sets the tone with two demand-and-labor proxies: the Conference Board’s Employment Trends Index (10:00 a.m. ET) and July consumer credit (3:00 p.m. ET). A softer ETI would confirm cooling hiring momentum, while an uptick in revolving credit would hint that households are leaning more on plastic to maintain spending. Both are early clues to whether demand is slowing fast enough to reinforce disinflation without cracking growth.
The inflation tests follow in quick succession. Producer prices arrive Wednesday morning, offering a pipeline view of cost pressures—especially in core goods exposed to global supply chains and tariffs. Thursday’s 8:30 a.m. ET CPI release is the main event: consensus points to a modest monthly gain alongside a gradual cooldown in the annual core rate. The micro details will decide the macro narrative. If core services stay sticky or if tariff-related pass-through lifts core goods, the case for a half-point move weakens. Conversely, broad-based easing across shelter, medical, and core goods would embolden doves arguing that policy is already restrictive enough to keep inflation on a downward glide path.
Friday’s preliminary University of Michigan survey closes the loop by updating consumer sentiment and inflation expectations. Those expectations—short- and long-term—matter because they shape wage bargaining and spending behavior, and the Fed is loath to ease aggressively if they drift higher. Layered on top is the legal cloud over tariffs: court outcomes could either require refunds (reducing future price pressure) or cement the levies (prolonging pass-through into goods prices). That binary feeds directly into the CPI trajectory traders are trying to handicap.
For investors, the tactical playbook is straightforward. Watch the CPI internals more than the headline, and pair them with the PPI breadth measures to gauge how durable disinflation really is. If services cool and goods stay tame, the Fed can cut and signal a data-dependent path; if not, expect a smaller step and cautious guidance. With Fed officials in blackout ahead of the September 16–17 meeting, the next four prints—ETI, consumer credit, PPI, CPI—will set the tone for rates, the dollar, and risk appetite into the end of the quarter.