It’s inflation week. The consumer price index comes out Wednesday — it’s been trending up the last few months ever since the U.S. invaded Iran in late February, driving energy prices higher. It stood at 3.8% in April.There’s some important context, though, in last week’s jobs report. Average hourly earnings — how much we’re all making — rose 3.4% year over year. If inflation keeps trending higher, wages aren’t going to go as far. That has implications for workers and for policymakers at the Federal Reserve.When the prices of groceries, gas, and rent rise faster than wages, consumers lose purchasing power.“A 3.4% raise sounds great until that you notice that what you buy is increasing at 4% so that's not a pay bump, that's a pay cut,” said Kristina Sargent, an associate professor of economics at Middlebury College.And no one likes a pay cut. Or, at least — most people. But then, there are economists, said economist Kathryn Anne Edwards.“This is when the economists do something really horrible, like say how badly people are doing, and then go, ‘And that's good!’ But it’s not good for workers,” she said.But it is kind of good for the Federal Reserve, which wants to keep inflation from climbing even higher.“If wage growth is low, then that should temper what could be a really accelerating inflation situation,” Edwards said.And that buys the Federal Reserve some time to figure out whether the Iran War is going to keep driving prices up and whether it needs to raise interest rates.Michael Pugliese, a senior economist with Wells Fargo, said Fed officials are weighing the possible outcomes. “Is this going to be a temporary phenomena, as you know, over the next several months, maybe the conflict winds down, supply chains normalize, energy prices, they're not going to drop immediately, but they start drifting lower?” he said.Or, will it be a longer lasting conflict that keeps prices rising for months? And will the recent gains in the labor market keep going? Pugliese expects policymakers will reassess all that in the fall before they make any big interest rate moves.Workers, though, don’t really have the luxury of waiting around.“I expect that these price shocks will ripple through the economy in coming months,” said Pavlina Tcherneva, an economist at Bard College. She also does not expect wages to improve much. “Workers are going to be squeezed on both sides, stagnating wages and increasing cost of living,” she said.Which could make for some tough decisions in households — arguably, harder choices than the ones Fed officials need to make.