Home / Business and Economy / Inflation Soars as Retail Sales Surge: Markets Brace for Fed's Next Move
Inflation Soars as Retail Sales Surge: Markets Brace for Fed's Next Move
18 Aug
Summary
- Retail sales rose 0.5% in July, boosted by Amazon Prime Day and auto/furniture demand
- Producer Price Index (PPI) inflation surged 0.9% in July, a 3-year high
- Investors await Fed Chair Powell's Jackson Hole speech for clues on rate cut plans
As of August 18, 2025, the markets entered the weekend with equities holding steady, while Treasury yields remained flat. Retail sales rose a solid 0.5% in July, supported by Amazon Prime Day and stronger auto and furniture demand. However, the cheers were tempered as the Producer Price Index (PPI) inflation roared higher, up 0.9% on the month, reaching a three-year high.
The hotter wholesale price print has cast a shadow over hopes for aggressive Federal Reserve rate cuts. With inflation surprising on the upside and consumer demand still resilient, Fed Chair Jerome Powell's upcoming remarks at the Jackson Hole symposium have taken on even greater significance. Investors will be listening closely for any hint that the Fed chair is ready to lean into easing despite the sticky prices, or whether the elevated PPI print will keep the central bank on a more cautious path.
The week ahead will also deliver a comprehensive set of U.S. housing data, including sentiment, starts, permits, and existing-home sales. This, combined with heavyweight earnings from big-box retail, cloud software, and China's internet giants, ensures markets will have no shortage of catalysts to navigate in the run-up to Powell's highly anticipated speech. The outcome of the Fed chair's address could either validate the market's gentle-landing hopes or upend them entirely, setting the tone for September.
