CPI report - 10 things to know with detail
- 1. CPI stands for Consumer Price Index, which is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.
- 2. The CPI report is released monthly by the Bureau of Labor Statistics and is considered a key indicator of inflation in the economy.
- 3. The CPI report tracks the prices of a wide range of goods and services, including food, housing, clothing, transportation, and medical care.
- 4. The CPI is calculated by comparing the current prices of the items in the market basket to their prices in a base year, which is designated as 100. Changes in the CPI reflect the rate of inflation or deflation in the economy.
- 5. The CPI report also includes a measure called core CPI, which excludes the volatile food and energy prices. Core CPI is often used as a more stable measure of underlying inflation trends.
- 6. The CPI report is closely watched by policymakers, economists, and investors as it provides important insights into the health of the economy and helps guide monetary policy decisions.
- 7. A higher CPI reading indicates that prices are rising at a faster rate, which can erode purchasing power and lead to higher interest rates. Conversely, a lower CPI reading suggests that inflation is subdued, which can support economic growth.
- 8. Inflation is generally considered a normal part of a healthy economy, but high or accelerating inflation can be a concern as it can undermine consumer confidence and reduce the value of savings and investments.
- 9. The Federal Reserve uses the CPI report as one of its key indicators when setting interest rates. A higher CPI reading may prompt the Fed to raise interest rates to cool off inflation, while a lower CPI reading may lead to a cut in interest rates to stimulate economic activity.
- 10. Overall, the CPI report provides valuable information about the cost of living for consumers and helps policymakers make informed decisions to manage inflation and support economic growth.