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CPI report explained: how to read the inflation numbers
The CPI report has 4 numbers that look almost the same. Once you know which is which, the headlines start to make sense.
What CPI measures
CPI stands for Consumer Price Index. It tracks the prices of things people buy every day: food, rent, gas, clothes, car insurance, haircuts and more. If the same basket of things costs more than before, that's inflation.
- Who publishes it: the US Bureau of Labor Statistics (BLS)
- When: once a month at 8:30 am ET, usually around the middle of the month
- Schedule: posted a year ahead on bls.gov
Our guide to CPI and FOMC days covers the trading plan for the day. This page goes one step deeper: how to read the numbers themselves.
The 4 numbers on the calendar
Your economic calendar usually shows CPI as 4 lines. They look alike, so here they are side by side.
| Line | What it means |
|---|---|
| CPI m/m | How much prices changed in one month |
| CPI y/y | How much prices changed over the past 12 months |
| Core CPI m/m | One-month change, without food and energy |
| Core CPI y/y | 12-month change, without food and energy |
Why leave out food and energy? Gas and grocery prices jump around a lot from month to month. Core CPI takes them out to show the slower, steadier trend underneath.
Here's the thing. Many traders look at core CPI m/m first. It's the freshest read on the steady part of inflation.
Why a tiny number can be a big deal
Monthly changes look small: 0.2%, 0.3%, 0.4%. But they add up over a year.
A math example: a 0.3% rise every month for 12 months works out to about 3.7% for the year (1.003 multiplied by itself 12 times is about 1.037). A 0.2% pace works out to about 2.4%. One tenth of a percent a month is a real difference.
That's why a CPI print that's just 0.1 above the forecast can move price hard. The market has priced in the forecast, so the surprise is what moves it.
Shelter: the biggest piece
The cost of housing, called "shelter" in the report, is the single biggest part of CPI. It covers rent and an estimate of what owning a home would cost if you rented it instead.
Shelter tends to change slowly. Rents are often set once a year, so the CPI number can lag behind what's happening in real time. When you read news about "sticky" inflation, shelter is often part of the reason.
Why the yearly number can mislead
The y/y number compares this month with the same month last year. If last year had a big jump, this year's y/y can look calm even if prices are still rising. If last year was quiet, y/y can look high.
In plain words: the y/y line depends on last year too. The m/m line shows what happened just now.
Why markets react
The Fed's job includes keeping inflation in check. CPI is the first big inflation report each month. A hotter-than-expected number can mean rates stay higher for longer. A cooler one can mean the opposite.
- The dollar often moves first, right at 8:30 am.
- Index futures react at once. Stocks don't open until 9:30 am ET, so they may open with a Gap.
- Gold and bonds react to where rates seem to be heading.
The Fed itself targets a different inflation number, the PCE price index, which comes out later in the month. CPI still moves markets more on the day, because it arrives first.
What a beginner can do on CPI day
- Know the time. 8:30 am ET, with an alarm at 8:00.
- Be flat or decide early. Close open trades, or keep them only with a stop and a size you're fine losing. Spreads can widen and stops can slip (Slippage).
- Wait 15–30 minutes. The first move often reverses.
- Trade the chart, not the number. Did a candle body close past the last place price turned around? If not, there's no trade.
Write down the 4 numbers. After the release, log actual vs forecast for all 4 lines. After a few months you'll see which line moved the chart most.
Common mistakes
- Mixing up m/m and y/y. A "3%" headline and a "0.3%" headline can be about the same report.
- Ignoring core. Headline CPI can drop because gas got cheaper while core stays firm.
- Trading the first candle. It's often the widest spread and the least reliable move of the day.
- Forgetting PPI. The PPI report often comes out the same week and can shift what traders expect from CPI.
Try it today
- Open the BLS schedule and find the next CPI date.
- Look up the last CPI release and write the 4 numbers down.
- Open a 5-minute chart of index futures or EUR/USD for that morning. Note what happened from 8:30 to 9:00 am ET.
- Write one line: "The surprise was in ___, and price did ___."
Questions
What is the difference between CPI and core CPI?
Headline CPI includes everything in the basket. Core CPI leaves out food and energy, because their prices jump around a lot, so it shows the steadier trend.
What time is the CPI report released?
At 8:30 am Eastern Time, once a month, usually around the middle of the month. The BLS posts the dates in advance.
Is CPI month over month or year over year?
Both. The report shows the one-month change and the 12-month change, for headline and core. Many traders watch core month over month first.
Why does CPI move the stock market?
CPI changes what traders expect the Fed to do with interest rates, and rates affect what stocks, the dollar and gold are worth.
Is CPI the Fed's preferred inflation measure?
No. The Fed's 2% goal is measured with the PCE price index. CPI still moves markets more on the day because it comes out first.
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