Inflation Rate
Published:
CPI measures the change in the price of a basket of goods and services bought by households, and it is the headline gauge of inflation. Core CPI strips out food and energy to show the underlying trend. Because central banks set interest rates to control inflation, a CPI surprise moves currencies quickly and is one of the highest-impact releases on the calendar.
Full explanation
The inflation rate measures the percentage change in the general level of consumer prices over a specified period. Year-on-year compares prices with the same period a year earlier, while month-on-month compares them with the previous month. Inflation is commonly calculated from changes in a consumer price index, but the inflation rate is the percentage rate of change—not the index itself.
YoY means year-on-year: prices compared with the same month twelve months earlier. MoM means month-on-month: prices compared with the previous month.
Why traders watch it
Inflation influences central-bank policy and interest-rate expectations. A difference between the forecast and the actual figure can affect a currency, because traders re-price how likely rate cuts or rate rises become.
Stronger vs weaker outcomes
Compare the actual figure with the forecast and the previous reading, and check whether the release is year-on-year or month-on-month before drawing any conclusion.
Typical volatility
An inflation result does not independently predict market direction. More precise measures (core inflation, HICP, PPI, the GDP deflator) are separate indicators with their own explanations.
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