Consumer Price Index - CPI
- Importance (A-F): This release merits a B+.
- Source: Bureau of Labor statistics, U.S. Department of Labor.
- Release Time: 8:30 ET, about the 13th of each month for the prior month.
- Raw Data Available At: http://stats.bls.gov/news.release/cpi.toc.htm.
The Consumer Price Index is a measure of the price level of a fixed market
basket of goods and services purchased by consumers. CPI is the most widely
cited inflation indicator, and it is used to calculate cost of living
adjustments for government programs and it is the basis of COLAs for many
private labor agreements as well. It has been criticized for overstating
inflation, because it does not adjust for substitution effects and because the
fixed basket does not reflect price changes in new technology goods which are
often declining in price. Despite these criticisms, it remains the benchmark
CPI can be greatly influenced in any given month by a movement in volatile
food and energy prices. Therefore, it is important to look at CPI excluding food
and energy, commonly called the "core rate" of inflation. Within the core rate,
some of the more volatile and closely watched components are apparel, tobacco,
airfares, and new cars. In addition to tracking the month/month changes in core
CPI, the year/year change in core CPI is seen by most economists as the best
measure of the underlying inflation rate.