What is CPI (Consumer Price Index)?
CPI measures the average change over time in prices paid by urban consumers for a representative basket of goods and services. Major components typically include: housing/shelter (largest weight), food, energy, transportation, medical care, recreation. Released monthly in most countries โ US Bureau of Labor Statistics, India's Ministry of Statistics, Eurostat, etc. The "core" version excludes food and energy.
Why it matters for investors
CPI is the headline inflation measure that drives central bank decisions, Treasury Inflation-Protected Securities (TIPS) returns, Social Security/pension adjustments, and most contractual inflation escalators. Markets react sharply to CPI surprises โ a 0.1% miss vs. expectations can move bond yields significantly.