CPI (US inflation): what it is and how it moves the dollar, gold and indices

What it is

The Consumer Price Index measures the change in the prices of a basket of goods and services bought by consumers. In the United States it is published by the Bureau of Labor Statistics, usually mid-month at 8:30 New York time. Similar indices exist for the eurozone (HICP), the UK and Japan.

Headline and core

The headline figure includes everything; the core excludes energy and food, which are more volatile, and is often what central banks watch to understand the underlying trend. Both the monthly and the annual change are published.

Why it matters

Central banks aim for inflation around 2%. A CPI higher than expected raises the probability of higher rates, supporting the currency; a lower one raises rate-cut expectations and weakens it.

• Inflation above expectations: the dollar tends to rise, gold and indices may fall
• Inflation below expectations: the dollar tends to fall, gold and indices may rise

How to behave

As with other high-impact data, spreads and volatility rise in the minutes of the release. Look at forecast, previous and actual for the core figure, then wait for the reaction before deciding. The site's calendar shows the time and expected impact.