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Inflation and the CPI: how to read the report and why markets react

The consumer price index (CPI) measures how fast the prices that households pay are rising. In the United States, it is published once a month at 8:30 a.m. New York time, and it is one of the releases that move markets the most: it shapes what the Federal Reserve will do with interest rates, and through that the dollar, bond yields, stock indices and gold. This page explains how to read it and why markets react.

What the CPI measures

The CPI follows the price of a basket of goods and services bought by consumers: housing, food, energy, transport, health, clothing, leisure and more. In the US, it is calculated by the Bureau of Labor Statistics (BLS) and published around the middle of each month, for the previous month. Other countries publish their own measure, such as the euro area’s HICP (Eurostat) and the UK CPI (Office for National Statistics).

How to read a CPI report

  • Headline CPI: all items. It moves a lot with energy and food prices.
  • Core CPI: excludes food and energy, the most volatile items. Central banks and markets watch it closely because it shows the underlying trend.
  • Month on month (m/m): the change since the previous month. This is the figure that surprises markets most often.
  • Year on year (y/y): the change over twelve months, compared with the 2% target of most central banks.

Each figure comes with three numbers: the actual (what is published), the forecast (the average of economists’ estimates) and the previous figure. Our economic calendar shows all three for every release.

Why markets react

What moves prices is the gap between the actual figure and the forecast. A CPI of 0.3% when 0.2% was expected is a surprise; the same 0.3% when 0.3% was expected changes little.

  • Inflation higher than expected: markets expect higher interest rates, or for longer. Bond yields and the dollar often rise, and stocks and gold often come under pressure.
  • Inflation lower than expected: rate cuts become more likely, and the opposite moves often follow.

The first minutes after 8:30 a.m. New York time are often very volatile, with sharp moves in both directions. A move can also reverse once markets have read the details, such as core inflation or housing costs. See how the Fed uses these figures on our page on the Federal Reserve.

CPI or PCE?

The Fed’s official target refers to another measure, the PCE price index, published by the Bureau of Economic Analysis about two weeks after the CPI. The two usually move together. The CPI comes out first and has more impact on markets, while the PCE confirms the trend that the Fed watches.

Inflation outside the United States

  • Euro area: Eurostat publishes a flash estimate of inflation at the end of each month or the start of the next, at 11:00 a.m. Central European Time. It matters for the euro and the European Central Bank.
  • United Kingdom: the ONS publishes the CPI around the middle of the month, at 7:00 a.m. UK time. It matters for the pound and the Bank of England.

Latest articles on inflation

Frequently asked questions

When is the US CPI released?

Once a month, usually around the middle of the month, at 8:30 a.m. New York time. The exact date is in our economic calendar.

What is core CPI?

The CPI without food and energy prices. It is less volatile than the headline figure and shows the underlying trend of inflation.

Why does a high CPI often push gold down?

Because it raises expectations of higher interest rates and a stronger dollar, which make gold, an asset that pays no interest, less attractive in the short term. The reaction is not automatic.

Is the CPI ever revised?

The monthly US CPI is generally not revised once published; only its seasonal adjustment factors are updated once a year.