Important inflation reports this week expected to show prices still on the rise

Key inflation reports this week are expected to show that prices accelerated again in August, though not in a manner that would keep the Federal Reserve from reducing its benchmark interest rate at a meeting next week.

The Bureau of Labor Statistics is scheduled to release the producer price index for August on Wednesday, followed by the more closely watched consumer price index the next day.

Economists expect the reports to show monthly increases of 0.3% across the board, including the headline all-items indexes as well as the critical core readings that exclude volatile food and energy prices, according to Dow Jones.

If that is the case, it would push the annual headline CPI rate to 2.9%, the highest level since January, and further from the Fed's 2% target and up 0.2 percentage point from July. On its face, that would seem to be a deterrent for the Fed to ease monetary policy when it meets next week.

However, two factors will come into play: First, the core reading is predicted to be unchanged at 3.1%. Second, the increase in inflation is largely expected to come from tariff-sensitive goods rather than services prices that affect a much larger part of the $30 trillion U.S. economy.

If those trends are apparent in the report, central bank policymakers are expected to look through the increase and turn their attention more to the increasingly weak jobs market that could use a boost from lower rates. Fed officials for now are mostly viewing tariffs as one-off price increases not likely to cause longer-lasting inflation.