Consumer Price Index (CPI)

In plain terms

Picture a shopping basket filled with groceries, clothing, transport, rent and phone bills. The CPI tracks how much that basket costs each month. "CPI at 3%" normally means prices are 3% higher than a year earlier.

In the US, the Bureau of Labor Statistics (BLS) publishes the CPI every month for the previous month.

Why it matters

It is one of the first numbers central banks look at when setting rates. If inflation stays above the 2% target, rate cuts get pushed back or hikes become more likely. That is why US CPI release days often move markets around the world.

How it connects to markets

• Hotter than expected: fewer expected rate cuts, so Treasury yields and the dollar tend to rise while gold, growth stocks and crypto come under pressure
• Cooler than expected: more expected cuts, lower yields, a softer dollar and usually firmer risk assets
• Markets react to the surprise versus forecasts more than to the number itself

Where to check

• BLS Consumer Price Index
• CPI release schedule