What it is
The Consumer Price Index (CPI) is a widely used measure of inflation, tracking the cost of a fixed basket of goods and services purchased by urban consumers. It includes categories like food, energy, housing, transportation, and medical care. The Bureau of Labor Statistics (BLS) collects price data monthly from thousands of retail stores and service establishments to calculate changes. The CPI is reported as a percentage change from the previous month or year.
The CPI is a key indicator for the Federal Reserve when assessing inflation and making monetary policy decisions, particularly regarding interest rates. A higher-than-expected CPI reading can signal persistent inflation, potentially leading the Fed to adopt a more hawkish stance. Investors monitor CPI releases closely, as they can influence market expectations for future rate hikes or cuts, impacting bond yields, stock prices, and commodity markets.
Why it matters
CPI directly impacts your purchasing power and helps the Federal Reserve decide on interest rates, affecting your borrowing costs and investment returns.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice