The U.S. Bureau of Labor Statistics is set to release the August Consumer Price Index (CPI) report at 8:30 a.m. Eastern Time tonight (20:30 Beijing time). This report represents the last piece of the inflation puzzle that policymakers will have in hand before the Federal Reserve's rate decision next week.

If the Dow Jones consensus forecast holds, the data will show a 0.4% month-over-month increase in prices for all goods and services, translating to an annual inflation rate of 3.4%. Excluding the volatile food and energy categories, core inflation is projected to rise 0.2% month-over-month and 2.4% year-over-year.

Combined with Thursday's Producer Price Index (PPI), which measures wholesale inflation, the upcoming CPI figures will give Fed officials a clearer view of how their preferred inflation gauge—the Personal Consumption Expenditures (PCE) price index—might perform when it is released at the end of September. This data is expected to carry substantial weight in the Federal Open Market Committee's (FOMC) rate decision next Wednesday, where even a single percentage point shift could mean the difference between holding rates steady or raising them.

"The final September FOMC decision hinges on the CPI data, given that a large portion of the PCE components are derived from the CPI," Nomura economists noted in a report. "At this point, we maintain our forecast that the Fed will not raise rates at the September meeting. However, an upside surprise in the August CPI—especially in the components linked to PCE—would notably increase the odds of a policy tightening next week."

Following Thursday's PPI release, traders boosted the probability of a 25-basis-point rate hike to above 73%, as measured by futures prices tracked in the CME Group's FedWatch tool. Expectations, however, have been volatile and highly sensitive to data releases and energy price movements, making Friday's figures even more consequential.

Fed Chair Kevin Warsh has indicated that the direction of monetary policy will remain dependent on incoming market indicators.

"The September Fed decision looked like a coin flip at the start of the month. The surge in energy prices during September could tip the scales in favor of a rate hike by the time the Fed meets next week," said Bill Adams, chief U.S. economist at Fifth Third Bank. "A major surprise in tomorrow's August CPI report, or a last-minute deal with Iran, could still sway the outcome."