CPI, The consumer price index
You will see and hear it abbreviated to C.P.I. This is the instrument used worldwide to measure inflation.
It is pretty much the main inflation report for the futures and financial markets. Any unexpected rises in this indicator usually lead to falling bond prices, rising interest rates, and increased market volatility.
Now before we go much further into this, it’s important to understand that there is no single best measure of inflation. Ideally, such an indicator would be comprehensive and cover price changes for all goods and services traded in the economy. However, different measures of price change are suited to analysing different parts of the economy, so the best approach depends on how the data is going to be used.
How is the CPI used? Tune into this week’s episode to find out.