US consumer price index (CPI)
How fast prices are rising in the United States.
The basics
The consumer price index tracks what a typical basket of goods and services costs. Its yearly change is the inflation rate: 3% means prices are 3% higher than a year ago.
The Federal Reserve aims to keep inflation close to 2%. Inflation above target makes interest rate rises, or fewer cuts, more likely, which is why this release moves markets.
How to read the result
- Above the forecast
- Inflation above the forecast makes higher interest rates more likely. The USD often rises; shares and gold can come under pressure.
- Below the forecast
- Inflation below the forecast makes rate cuts more likely. The USD often falls; shares can benefit.
Going deeper
“Core” inflation leaves out food and energy, whose prices swing with harvests and oil. Central banks watch core more closely because it shows the underlying trend.
The month-on-month change shows the latest pressure; the year-on-year rate moves slowly because it compares with a year ago. A small difference matters: 0.1 percentage point above the forecast is a real surprise.
Shelter (rents) is about a third of the index and moves slowly; markets watch “supercore” (services excluding housing and energy) for wage-driven inflation. The Fed’s 2% target is set on the PCE index, which usually runs a little below CPI.
FAQs
- Why can the price move the “wrong” way?
- Prices already reflect the forecast, so markets react to the surprise, not the number itself. Other parts of the same release, revisions to earlier months or other news in the same hour can outweigh the headline figure, and a first move often reverses within the hour.
- Should I close my trade before the release?
- That is your decision; this page does not give advice. What is certain is that prices can jump in seconds around big releases, spreads widen, and a stop loss can close at a worse price than the one you set. Many traders check their position size and stop before the release.