What is CPI?
The Consumer Price Index (CPI) measures the average change in prices paid by consumers for a basket of goods and services. It's released monthly by the Bureau of Labor Statistics, typically around the 10th-13th of each month at 8:30 AM ET.
Why traders care
CPI is the most-watched inflation indicator because it directly influences Federal Reserve policy. Higher-than-expected CPI readings suggest the Fed may keep rates higher for longer, which is typically bearish for equities and bullish for the dollar.
Core CPI vs Headline CPI
Headline CPI: includes all items, including volatile food and energy prices
Core CPI: excludes food and energy — this is what the Fed watches most closely
How markets react
| CPI Result | Stocks (SPY/QQQ) | Bonds (TLT) | Gold (GLD) | VIX |
|---|---|---|---|---|
| Higher than expected | Bearish | Bearish | Mixed | Rises |
| Lower than expected | Bullish | Bullish | Mixed | Falls |
| In-line | Muted reaction | Muted | Muted | Falls |
Trading tips
Watch the 8:30 AM candle — the initial move often sets the direction for the session
Core CPI matters more than headline — focus on the ex-food-and-energy number
Month-over-month matters more than year-over-year for short-term traders
Supercore CPI (services ex-housing) is the newest metric the Fed watches closely
Combine with PPI — PPI released the day before can foreshadow CPI direction