This week's inflation data will settle the September hike question

A new week begins, and every eye is on the August consumer price report. Friday's jobs number came in at three times forecasts, which all but erased worries about the labor market. The Fed's worry is now almost entirely about prices.

That gives this CPI extra weight. Energy costs are expected to lift the headline to around 3.6%, and the key question is how hot the core reading, which strips out food and energy, turns out to be. Analysts say inflation now has to come in noticeably cooler for the Fed to hold. Officials are also as divided as they have been in a decade, so a single number could tilt the vote.

Markets already price roughly a 60% chance of a hike at the September 16 meeting. The Dow fell 0.5% on Friday, yet the index is still near a record and the VIX sits at a two-year low, a calm mood that sits oddly beside record diesel prices.

A few dates to keep handy. US markets are closed Monday for Labor Day, then CPI and producer prices follow. Oracle and Kroger also report, giving a read on AI infrastructure demand and household spending.