Forex glossary
Consumer Price Index (CPI)
A family of consumer-price indices. U.S. all-items CPI-U differs from the measure excluding food and energy; specify the country, population, coverage, comparison period and seasonal treatment rather than treating it as every household's costs.
Illustrative example
How does it work in practice?
In a hypothetical U.S. all-items CPI-U series with the same base and no seasonal adjustment, the index rises from 100 to 104 over a year. Inflation is 4%, not 104%.
A case to work through
Headline and core
A fictional release reports headline annual CPI of 3.1%, core 3.3% and a headline forecast of 3.0%.
- Match the headline forecast with headline actual.
- Surprise is 3.1 − 3.0 = +0.1 percentage point.
What follows? Do not substitute core CPI for headline CPI.
Example boundary: The surprise calculation does not predict currency direction.
Match CPI coverage
Text description of the diagram
- Headline forecast: Hypothetical annual CPI: 3.0%.
- Headline actual: Matching annual CPI: 3.1%.
- Surprise: 3.1 − 3.0 = +0.1 percentage point.
A useful distinction
Consumer Price Index (CPI) / PCE Price Index (Fed's Preferred Inflation Gauge)
CPI and PCE are price measures with different coverage and methods.
Change an assumption, see the result
What changes if…?
This model uses hypothetical annual CPI percentages. Actual 2.8%, forecast 2.5% and previous 2.6% give surprise +0.3 and change +0.2 percentage point, without predicting an exchange rate.
Example of an indicator expressed as a percentage, such as year-on-year CPI. Differences are percentage points. Compare the same measure, period and data version. The model does not determine an exchange-rate reaction; a consensus forecast is not a statistical agency release.
Check your understanding
Match a forecast's scope and period to the released CPI.
Show the answer and explanation
+0.3 percentage point
Subtract equivalent actual and forecast measures.
Publication, units and interpretation
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Related terms
Sources and documentation
- Consumer Price Index Frequently Asked Questions – BLS
Distinguishes CPI index levels, percentage changes, periods and vintages.
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The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.