This Week’s Inflation Data: CPI and PPI Could Change Everything

Inflation Data and OPEC Report: How This Week Could Rewrite Fed Policy

According to current reports, this week is full of critical pieces of economic information that may have an impact on international markets, the US dollar, the prices of oil, and even cryptocurrency. Reports on inflation and consumer spending have also been scheduled for release, which may influence the Fed's decision on the interest rate hike in September. 

Source: The Kobeissi Letter X

Data Intake For Traders and Investors

1. OPEC Monthly Report – Tuesday

On Tuesday, the OPEC Monthly Report will be released, providing timely insights into the global oil supply and demand. This information may impact energy prices and, in turn, inflation expectations. Any indication of lower oil supply could drive up prices and exacerbate inflationary pressures in the US.

2. July CPI Inflation Data – Tuesday

The Consumer Price Index (CPI) for July will also be released on Tuesday. CPI measures the average change in prices paid by consumers. This report is watched closely because it shows if inflation is moving closer to the Fed’s 2% target.

Why it matters: In July 2024, the Fed slashed rates by 0.5%, surprising markets with a swing into expansionary policy despite earlier guidance suggesting a hold in such a tightening period. If CPI comes in higher than expected, it could change market bets for another cut in September.

The Bureau of Labor Statistics has historical data on CPI which can be sharply revised. One example is a 400% revision upwards, suggesting that traders will pay attention to the release due to possible surprises.

3. July PPI Inflation Data – Thursday

On Thursday, the Producer Price Index (PPI) is scheduled for release. PPI is a leading indicator for CPI because it measures prices at the wholesale level which usually come down to the consumer level. High PPI numbers may indicate high CPI in the future.

4. Retail Sales July – Friday

Friday brings Retail Sales figures. Retail Sales gives an indication of increase or decrease in consumer spending. Strong spending can support economic growth but may also keep inflation higher. Research by the National Bureau of Economic Research shows a strong link between retail sales and shifts in consumer behavior.

5. MI Consumer Sentiment – Friday

Also on Friday, the University of Michigan Consumer Sentiment Index will be published. This measures how confident people feel about the economy. Consumer confidence often influences spending and investment trends.

The Fed’s Next Move Under the Spotlight

Inflation data for this week will be directly relevant for the Federal Reserve’s meeting in September 2025. They have been targeting 2% inflation, which is supported by decades of policy studies. If CPI and PPI come in higher than expected, it may reduce the chances of another rate cut. If they show cooling prices, the Fed might continue policy easing.

What It Means for Crypto and Markets

Expect volatility in the stock, bond, oil, and crypto markets. This is especially true for the crypto market, which responds to macroeconomic data because interest rate fluctuations affect risk appetite. A crypto breakout may be triggered by softer inflation reads, and vice versa.

Aforte, AI-driven trading models have been on the rise, causing more than 60% of U.S. equity trades (CFA Institute, 2024). They will react instantaneously to the data. Furthermore, it increases the short-term volatility of the market.

Conclusion

This is a big week for market direction. With the OPEC Report, PPI, Retail Sales, and user Sentiment all arriving within five days — plus five Federal Reserve speeches — traders should prepare for sharp market moves. The outcome could set the tone for September’s Fed meeting and decide whether markets, including crypto, break out or break down.