U.S. Consumer Price Index
Published:
The U.S. Consumer Price Index tracks changes in prices paid by urban consumers and is a major gauge of U.S. inflation pressure.
Full explanation
The U.S. Consumer Price Index measures how the prices paid by urban consumers for a broad basket of goods and services change over time. The Bureau of Labor Statistics publishes it monthly as an index level (relative to a 1982-84 base of 100) in two forms: seasonally adjusted ("s.a."), which removes recurring seasonal price patterns, and not seasonally adjusted ("n.s.a."), which keeps them. When a calendar shows "CPI Index, s.a" or "CPI Index, n.s.a.", the reported value is that index level, not an inflation rate. Monthly (MoM) and annual (YoY) inflation rates are calculated from changes in the index.
Why traders watch it
Traders watch U.S. CPI because it is a key input for Federal Reserve policy expectations, Treasury yields, inflation-linked securities, the U.S. dollar and broad risk sentiment.
Stronger vs weaker outcomes
For inflation-rate releases (MoM or YoY), a higher-than-expected reading may suggest stronger price pressure and could lift expectations for tighter Fed policy, while a lower reading may suggest easing pressure. An index-level figure is not read this way on its own: what matters is the percentage change it implies versus the prior period, which the companion MoM and YoY releases report.
Typical volatility
Very High. Distinguish index levels from percentage-change measures, and seasonally adjusted from not-seasonally-adjusted data. Not-seasonally-adjusted month-to-month changes can reflect normal seasonal patterns; the official 12-month inflation rate is based on not-seasonally-adjusted data. Headline CPI can be moved by volatile food and energy prices.
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