The Federal Reserve is widely expected to cut interest rates at next week’s policy meeting on Sep. 17. Will Thursday’s report on consumer inflation in August play along?Economists are expecting a mixed bag for this week’s August update on the consumer price index. Headline CPI is set to edge higher to a 2.9% year-over-year pace, according to the consensus forecast via Econoday.com. If correct, the pickup will mark the fastest annual pace since January and lift the overall inflation rate further above the Fed’s 2% target.Core CPI is expected to hold steady at 3.1% vs. the year-ago level, offering a degree of support for arguing that inflation isn’t accelerating. This measure of inflation, which strips out volatile food and energy prices, is considered a better measure of the trend. But holding steady at more than a full percentage point above the Fed’s 2% target is less than ideal for arguing that current monetary policy has tamed inflation.Although inflation has fallen sharply over the last several years, disinflation has stalled recently and the tariffs threaten to lift pricing pressure. Thursday’s CPI update will be closely read for deciding if tariffs are finally starting to flow through to pricing data overall.Reviewing several alternative measures of CPI suggests that a reflationary trend is emerging, if only gradually so far. The chart below compares year-over-year changes for the standard headline and core CPI estimates of inflation along with other measures that arguably offer a more robust measure of pricing pressure, such as the Atlanta Fed’s sticky-price CPI, a weighted basket of items that change price relatively slowly.The average of the 1-year changes for the indexes (red line) has increased for three straight months through July. A fourth advance would be worrisome by suggesting that reflationary pressure is strengthening and that easing monetary policy would fuel this trend.The challenge for the Fed is that even if inflation is picking up, the slowdown in employment growth is now seen as a higher priority for the central bank. The bond market seems to agree. The policy-sensitive US 2-year Treasury yield fell to 3.49% on Monday (Sep. 8) – a three-year low and well below the 4.33% median Fed funds target rate.Cue up Thursday’s CPI update, with a crucial question in mind: Will the August inflation numbers change the calculus for next week’s Fed decision?