The Consumer Price Index (CPI) is a statistical measure published monthly by the U.S. Bureau of Labor Statistics that tracks the average change in prices paid by urban consumers for a basket of goods and services. CPI is the most widely used measure of inflation and directly influences Federal Reserve interest rate decisions, Treasury yields, wage negotiations, Social Security adjustments, and financial markets globally.
The BLS collects price data for approximately 80,000 items each month from roughly 23,000 retail and service establishments across 75 urban areas. Items are weighted by their share of typical consumer spending: housing (about 36%), food (about 13%), transportation (about 16%), medical care, education, and recreation. The index is set to 100 for a reference period (1982-1984), so a CPI of 315 means prices have risen 215% since then.
Two key variants are reported: headline CPI (all items) and core CPI (excluding food and energy, which are volatile). Core CPI is what the Fed watches most closely for monetary policy decisions. A year-over-year CPI increase of 2% is the Fed's target inflation rate. Readings significantly above or below 2% can trigger rate hikes or cuts.
CPI releases are among the most market-moving economic events. A higher-than-expected CPI reading suggests persistent inflation, which raises expectations for Fed rate hikes, typically driving bond yields up and stock prices down. A lower-than-expected reading suggests cooling inflation and potential rate cuts, generally positive for risk assets including crypto. For traders, the CPI release date (usually the second week of each month) is a high-volatility event that requires preparation.
The Economic Data panel on the TerminalFeed dashboard shows the latest CPI reading alongside the Fed Funds Rate and unemployment data, pulled from the FRED API. The Why Data Matters for Traders article discusses CPI as a key indicator that traders should monitor.