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CPI Report (Inflation)

Monthly inflation data that directly impacts Fed policy and interest rates.

Quick Answer

The Consumer Price Index measures the change in prices paid by consumers. Released monthly by the Bureau of Labor Statistics, CPI is the Fed's primary inflation gauge. Hot inflation = rate hikes = stocks down. Cool inflation = rate cuts = stocks up.

On This Page

Overview

The Consumer Price Index measures the change in prices paid by consumers. Released monthly by the Bureau of Labor Statistics, CPI is the Fed's primary inflation gauge. Hot inflation = rate hikes = stocks down. Cool inflation = rate cuts = stocks up.

What It Is

Grocery store prices
CPI measures the change in consumer prices

CPI tracks the average change in prices for a basket of consumer goods and services—food, housing, transportation, healthcare, etc. It's expressed as a year-over-year percentage change. 2% is the Fed's target. Above 2% = inflation, below 2% = deflation risk.

Why It Matters

Inflation determines Fed policy. When CPI runs hot (above 3%), the Fed raises rates to cool the economy. When CPI is tame, rates stay low or get cut.

Warning

Since 2022, CPI has been THE most important data point for markets, often causing 2%+ daily swings.

Core vs Headline

Headline CPI includes everything. Core CPI excludes volatile food and energy prices.

Pro Tip

The Fed focuses more on Core CPI because it shows underlying inflatiinflation. A hot headline but cool core is usually okay. Hot core is a problem.

Timing & Schedule

Typical Time

8:30 AM ET

Schedule Notes

Released around the 10th-13th of each month, measuring the previous month's prices.

Typical Schedule

J
F
M
A
M
J
J
A
S
O
N
D

Every month

Key Metrics to Watch

1
Headline CPI (Year-over-Year)
2
Core CPI (excluding food & energy)
3
Month-over-Month Change
4
Shelter Inflation
5
Services Inflation

Trading Strategies

Common Mistakes to Avoid

Only watching headline number

Why It Happens

How to Avoid

Be aware and plan accordingly

Fighting the trend

Why It Happens

How to Avoid

Be aware and plan accordingly

Ignoring shelter inflation

Why It Happens

How to Avoid

Be aware and plan accordingly

Historical Examples

Nov 10, 2022

CPI came in at 7.7% vs 8.0% expected—first sign inflation was cooling.

CPI came in at 7.7% vs 8.0% expected—first sign inflation was cooling.

Market Reaction:

Jan 11, 2024

CPI ticked up unexpectedly, dashing hopes of imminent rate cuts.

CPI ticked up unexpectedly, dashing hopes of imminent rate cuts.

Market Reaction:

Preparation Checklist

  • Know the consensus estimate for both headline and core
  • Review the previous month's components (what drove it?)
  • Check Fed speeches for hints on what they're watching
  • Be ready at 8:30 AM—moves happen fast
  • Consider hedging positions before release
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