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The Core Consumer Price Index (CPI) is a crucial economic indicator used to gauge the changes in the price of goods and services that households consume, excluding the typically volatile sectors of food and energy. It is an essential tool for understanding inflationary trends within an economy, explicitly focusing on the underlying inflationary pressures that are less likely to be influenced by temporary shocks in food and energy prices.
Please check the Table with the latest CPI:
| Release Date | Time | Actual | Forecast | Previous |
|---|---|---|---|---|
| Aug 14, 2024 (Jul) | 08:30 | 3.2% | 3.3% | |
| Jul 11, 2024 (Jun) | 08:30 | 3.3% | 3.4% | 3.4% |
| Jun 12, 2024 (May) | 08:30 | 3.4% | 3.5% | 3.6% |
| May 15, 2024 (Apr) | 08:30 | 3.6% | 3.6% | 3.8% |
| Apr 10, 2024 (Mar) | 08:30 | 3.8% | 3.7% | 3.8% |
| Mar 12, 2024 (Feb) | 08:30 | 3.8% | 3.7% | 3.9% |
| Feb 13, 2024 (Jan) | 09:30 | 3.9% | 3.7% | 3.9% |
| Jan 11, 2024 (Dec) | 09:30 | 3.9% | 3.8% | 4.0% |
| Dec 12, 2023 (Nov) | 09:30 | 4.0% | 4.0% | 4.0% |
| Nov 14, 2023 (Oct) | 09:30 | 4.0% | 4.1% | 4.1% |
| Oct 12, 2023 (Sep) | 08:30 | 4.1% | 4.1% | 4.3% |
| Sep 13, 2023 (Aug) | 08:30 | 4.3% | 4.3% | 4.7% |
| Aug 10, 2023 (Jul) | 08:30 | 4.7% | 4.8% | 4.8% |
| Jul 12, 2023 (Jun) | 08:30 | 4.8% | 5.0% | 5.3% |
| Jun 13, 2023 (May) | 08:30 | 5.3% | 5.3% | 5.5% |
| May 10, 2023 (Apr) | 08:30 | 5.5% | 5.5% | 5.6% |
| Apr 12, 2023 (Mar) | 08:30 | 5.6% | 5.6% | 5.5% |
| Mar 14, 2023 (Feb) | 08:30 | 5.5% | 5.5% | 5.6% |
| Feb 14, 2023 (Jan) | 09:30 | 5.6% | 5.5% | 5.7% |
| Jan 12, 2023 (Dec) | 09:30 | 5.7% | 5.7% | 6.0% |
| Dec 13, 2022 (Nov) | 09:30 | 6.0% | 6.1% | 6.3% |
| Nov 10, 2022 (Oct) | 09:30 | 6.3% | 6.5% | 6.6% |
| Oct 13, 2022 (Sep) | 08:30 | 6.6% | 6.5% | 6.3% |
| Sep 13, 2022 (Aug) | 08:30 | 6.3% | 6.1% | 5.9% |
| Aug 10, 2022 (Jul) | 08:30 | 5.9% | 6.1% | 5.9% |
| Jul 13, 2022 (Jun) | 08:30 | 5.9% | 5.7% | 6.0% |
| Jun 10, 2022 (May) | 08:30 | 6.0% | 5.9% | 6.2% |
| May 11, 2022 (Apr) | 08:30 | 6.2% | 6.0% | 6.5% |
| Apr 12, 2022 (Mar) | 08:30 | 6.5% | 6.6% | 6.4% |
| Mar 10, 2022 (Feb) | 09:30 | 6.4% | 5.9% | 6.0% |
| Feb 10, 2022 (Jan) | 09:30 | 6.0% | 5.9% | 5.5% |
| Jan 12, 2022 (Dec) | 09:30 | 5.5% | 5.4% | 4.9% |
| Dec 10, 2021 (Nov) | 09:30 | 4.9% | 4.9% | 4.6% |
| Nov 10, 2021 (Oct) | 09:30 | 4.6% | 4.3% | 4.0% |
| Oct 13, 2021 (Sep) | 08:30 | 4.0% | 4.0% | 4.0% |
| Sep 14, 2021 (Aug) | 08:30 | 4.0% | 4.2% | 4.3% |
| Aug 11, 2021 (Jul) | 08:30 | 4.3% | 4.3% | 4.5% |
| Jul 13, 2021 (Jun) | 08:30 | 4.5% | 4.0% | 3.8% |
| Jun 10, 2021 (May) | 08:30 | 3.8% | 3.4% | 3.0% |
| May 12, 2021 (Apr) | 08:30 | 3.0% | 2.3% | 1.6% |
| Apr 13, 2021 (Mar) | 08:30 | 1.6% | 1.5% | 1.3% |
| Mar 10, 2021 (Feb) | 09:30 | 1.3% | 1.4% | 1.4% |
The Role of the Core CPI in Economic Analysis
The Core CPI is a subset of the broader Consumer Price Index (CPI), which tracks the overall change in the price level of a basket of goods and services purchased by consumers. The CPI is often referred to as a “headline” measure because it includes all categories of goods and services, including food and energy, whose prices can fluctuate significantly due to factors like seasonal changes, geopolitical tensions, or natural disasters.
By excluding food and energy, the Core CPI provides a more stable and reliable measure of long-term inflation trends. This makes it particularly useful for policymakers, economists, and investors who are interested in understanding the underlying inflationary pressures in the economy, without the noise introduced by the volatile food and energy prices.
How the Core CPI is Calculated
The Core CPI is calculated by taking the CPI and removing the categories related to food and energy. The remaining components of the CPI basket typically include goods and services such as housing, apparel, transportation (excluding fuel), medical care, recreation, education, and communication. These components are weighted according to their relative importance in the average consumer’s spending habits.
The Bureau of Labor Statistics (BLS) in the United States is responsible for collecting the data and calculating the CPI and Core CPI. The BLS surveys thousands of prices across various regions and sectors, then aggregates these prices into a single index number. The percentage change in this index from one period to the next reflects the rate of inflation.
Importance of the Core CPI in Economic Decision-Making
The Core CPI is a critical metric for several reasons:
- Monetary Policy: Central banks, such as the Federal Reserve in the United States, closely monitor the Core CPI as part of their decision-making process. Inflation targeting is a key component of monetary policy, and the Core CPI provides a clearer picture of inflationary trends without the distortions caused by temporary spikes or drops in food and energy prices. If the Core CPI shows signs of rising inflation, central banks may decide to raise interest rates to cool down the economy. Conversely, if the Core CPI indicates low inflation, central banks might lower interest rates to stimulate economic activity.
- Investment Decisions: Investors use the Core CPI to assess the health of the economy and make informed decisions about their portfolios. For example, a rising Core CPI may signal to investors that inflation is accelerating, potentially leading them to invest in assets that typically perform well in inflationary environments, such as commodities, real estate, or inflation-protected securities. On the other hand, a falling or stable Core CPI may encourage investment in stocks and bonds, as it suggests that inflationary pressures are under control.
- Wage Negotiations: The Core CPI is also used in wage negotiations, as it reflects the changes in the cost of living that affect workers. Employers and labor unions may use the Core CPI as a benchmark for determining wage increases, ensuring that wages keep pace with the real cost of living, excluding the more volatile categories of food and energy.
The Relationship Between the Core CPI and the U.S. Dollar (USD)
The Core CPI has a significant impact on the value of the U.S. dollar (USD) in the foreign exchange (forex) markets. Here’s how:
- Higher Than Expected Core CPI: When the Core CPI comes in higher than expected, it suggests that inflationary pressures are stronger than anticipated. This can lead to expectations of tighter monetary policy, as the Federal Reserve may raise interest rates to curb inflation. Higher interest rates typically attract foreign investment, as investors seek higher returns on their investments. This increased demand for the USD can drive its value higher, making it bullish for the currency.
- Lower Than Expected Core CPI: Conversely, if the Core CPI is lower than expected, it indicates weaker inflationary pressures. This can lead to expectations that the Federal Reserve might maintain or even lower interest rates to support economic growth. Lower interest rates tend to reduce the attractiveness of the USD for foreign investors, leading to a decrease in demand for the currency. As a result, a lower-than-expected Core CPI is generally bearish for the USD.
Core CPI as a Predictor of Economic Trends
Beyond its immediate impact on the forex market, the Core CPI is also a predictor of broader economic trends. Persistent increases in the Core CPI over time may signal the beginning of a period of sustained inflation, which can erode purchasing power and impact economic growth. On the other hand, a stable or declining Core CPI suggests that inflation is under control, which can foster a stable economic environment conducive to growth.
In conclusion, the Core CPI is a vital economic indicator that provides insights into the underlying inflationary trends within an economy. By excluding the volatile categories of food and energy, it offers a clearer view of long-term inflation, which is crucial for policymakers, investors, and other economic stakeholders. Its influence on the U.S. dollar and its role in shaping monetary policy underscore its importance in the global financial system. Understanding the Core CPI is essential for anyone involved in economic analysis, financial markets, or business planning.
