Consumer price index (CPI)
|Release Date:||Released monthly, usually comes out in the US on the 15th day of the new month|
|Release Time:||At 9.30am US Eastern Time|
|Released By:||The US Census Bureau|
The Consumer Price Index is a measure of consumer inflation. This data is released in several countries. In the US, the more important of the two Consumer Price Index data is the Consumer Price Index excluding the cost of food and energy. The reason for the exclusion of food and energy costs from the calculation has to do with the intense volatility of these items, which skews the measurement. This data is released by the Bureau of Labor Statistics in the US, Statistics Canada in Canada and Office of National Statistics in the UK.
In the UK, Canada, Australia and New Zealand, the Core Consumer Price Index is also measured. This indicator measures the change in the price of a fixed basket of goods and services purchased by consumers.
Consumer prices tend to account for a majority of overall inflation. Inflation is a highly monitored economic indicator because rising prices usually lead the central bank to raise interest rates to make it costlier to own money.
Time of Release
The Core Consumer Price Index report usually comes out in the US on the 15th day of the new month. The time of release is 9.30am US Eastern Time. The data is released on webpage of the US Census Bureau and also on independent news feeds from Bloomberg and Thomas Reuters.
Interpreting the Data
The Core CPI is a sound measure of consumer inflation in a country. Inflation results when there is more money chasing fewer goods. In order to keep inflation controlled, the central bank would raise interest rates. However, this also makes it more valuable to own bonds, and also makes money market deposits bear more interest. As such, investors usually move in to invest in these vehicles and to do this; they need to purchase the local currency to do this. All these tend to create a demand for the local currency, leading to an increase in its value.
If the Core CPI were to be lower than expected, then the reverse would be the case. It would be less desirable to hold the local currency, and the reduced demand would lead to a drop in the value of the currency.
The Core CPI is thus a high impact news release in the US, UK, Canada and Australia.
The Consumer Price Index is actually a weighted average of the change in prices of more than 200 categories of consumer goods. However, the most important of these groups are: food and beverages, housing, clothing and apparel, transportation, healthcare, recreation, education and communications.