Core Cpi
What it measures
Core CPI measures the change in the price level of a basket of goods and services commonly purchased by households. This basket includes items such as food, housing, transportation, and medical care. It is a key indicator of inflation, which is the rate at which the general level of prices for goods and services is rising, and, consequently, the purchasing power of currency is falling. Core CPI excludes volatile items like food and energy to provide a clearer picture of underlying inflation trends.
Latest reading
The latest reading of Core CPI was reported at 2.3% year-over-year, indicating a moderate increase in the cost of living. This figure reflects the average change in prices over the past year, excluding the more volatile food and energy sectors. The reading suggests that inflation remains within a manageable range, but it is still a significant factor in economic policy decisions.
History
Core CPI has a long history dating back to the 1970s when it was first introduced as a measure of inflation. Over the years, it has been refined to better capture the true cost of living for households. The U.S. Bureau of Labor Statistics (BLS) compiles the data, which is released monthly. The history of Core CPI shows that it has been a crucial tool for policymakers, economists, and investors to understand and respond to inflationary pressures.
How it is calculated
Core CPI is calculated by the Bureau of Labor Statistics (BLS) through a complex process. The BLS first gathers data on prices from a wide range of retail establishments, service providers, and other sources. This data is then used to construct a price index for a fixed basket of goods and services. The basket is updated periodically to reflect changes in consumer spending patterns. The index is calculated by comparing the current prices of the basket to a base period, typically set as the year 1982-1984. The percentage change in the index from one period to another is the Core CPI.
Why it moves markets
Core CPI is a critical market-moving indicator because it provides insights into the overall health of the economy. A higher Core CPI reading can indicate that inflation is rising, which can lead to higher interest rates as the central bank may need to tighten monetary policy to control inflation. Conversely, a lower Core CPI reading can suggest that inflation is cooling, potentially leading to lower interest rates and easier monetary policy. These changes in monetary policy can significantly impact stock markets, bond yields, and currency values.
Release schedule
Core CPI is released on the first Tuesday of each month by the Bureau of Labor Statistics (BLS). The release typically occurs around 8:30 AM Eastern Time. The exact date can vary slightly depending on the calendar, but it is always the first Tuesday of the month. Market participants closely monitor this release as it provides the latest information on inflation trends and can influence trading decisions and central bank policy expectations.
