top of page

What is US Consumer Price Index and how to use it for trading

The US Bureau of Labor Statistics (BLS) has been publishing CPI data since 1913, providing over a century of historical data. The CPI data can be accessed through the BLS website, which offers a range of data and tools to analyze the data.

The US Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a basket of goods and services. The CPI is published monthly by the Bureau of Labor Statistics (BLS) and is one of the most widely followed economic indicators in the United States.

Historical CPI data is typically presented in two forms: seasonally adjusted and not seasonally adjusted. Seasonally adjusted CPI data removes the effects of seasonal variations on prices, making it easier to compare prices over time. Not seasonally adjusted CPI data shows the raw price changes for each month, without any seasonal adjustments.

Over time, the CPI has undergone changes to its methodology and scope. For example, the CPI in the 1980s and 1990s included a significant weight for housing and used a different methodology for measuring inflation. The BLS has updated the CPI several times since then to better reflect the changing economy and consumer spending patterns.

Investors and traders can use the CPI data to help them anticipate changes in inflation, which can have an impact on interest rates and the value of various asset classes. Generally, higher inflation can lead to higher interest rates and lower asset prices, while lower inflation can lead to lower interest rates and higher asset prices.

For example, if the CPI data is released showing that inflation is higher than expected, traders may anticipate that the Federal Reserve will increase interest rates in order to combat inflation. This could cause the value of bonds and other fixed income investments to decrease, as higher interest rates make these investments less attractive compared to other investments.

Historical CPI data is available from the BLS website and other economic data providers. Traders can use this data to identify trends in inflation over time and anticipate how current CPI data may impact the markets. For example, if the historical data shows that inflation tends to increase during certain periods of the year, traders may anticipate this trend and adjust their investment strategies accordingly.


bottom of page