Indicator Basics 3 min read

CPI inflation

Consumer Price Index

CPI shows how much the prices of a typical household’s shopping basket have changed, from food and fuel to rent. It is the most quoted measure of inflation, a kind of price thermometer. Markets mainly watch the US reading: a higher-than-expected figure usually means that the Fed will keep interest rates high for longer.

At a glance

Published byBLSBureau of Labor Statistics, USA

How oftenmonthlyusually mid-month; for September on 14 Oct

What time1:30 pmusually, UK time (8:30 am in New York)

Fed target2%measured by PCE inflation

Why “usually”: the US and Europe change their clocks on different days. In spring the US moves to summer time 2–3 weeks earlier, and in autumn it returns to winter time a week later. If a release falls in such a week, CPI comes out an hour earlier in the UK, at 12:30 pm.

How to read it

At every release, look at two things

The YoY rate: the change versus the same month a year earlier.
Result vs forecast: is the reading above or below expectations? The market reacts mainly to this gap (cheat sheet below).

The Fed targets 2% inflation, but as measured by PCE; CPI is usually a little higher. The more lasting trend is shown by core inflation.

3.7%September 2026 (August: 3.4%)

Fed target

An example

US CPI · September 2026

Basket a year ago$100.00

Same basket today$103.70

Inflation YoY+3.7%

Market forecast3.6%

Surprise+0.1 pp

One tenth of a percentage point was enough. US CPI for September came in at 3.7% instead of the expected 3.6%, and the market briefly panicked: the odds of a Fed rate hike as early as October jumped to as much as 50%. Emotions only calmed after cautious words from Fed officials (brief of 15 October).

Cheat sheet: how the market usually reacts to US CPI

CPI readingAbove forecast

Bond yieldsrise

Dollargains

Stocksfall

CPI readingIn line with forecast

Bond yieldsunchanged

Dollarunchanged

Stocksunchanged

CPI readingBelow forecast

Bond yieldsfall

Dollarweakens

Stocksrise

The market reacts mainly to the surprise, the gap between the reading and the forecast (the consensus), not to the level of inflation itself: 4% against a forecast of 4.2% can cheer the stock market. This is a typical market reaction.

Test yourself

1. US CPI rose 0.4% MoM against a forecast of 0.3%. What usually happens to US bond yields?

2. How does core inflation differ from headline CPI?

3. US inflation came in at 4.0% YoY, while the market expected 4.2%. How do stocks usually react?

Answer the 3 questions.

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Recently in our briefs

19 Oct 2026Chip index drops 11.4% on AI costs and Chinese GDP rises by 4.5%This will be a critical theme ahead of Friday’s national CPI inflation release in Japan.
18 Oct 2026Tech sell-off, Nasdaq drops 2.1% and US inflation rises to 3.7%The latest US Consumer Price Index (CPI) data showed headline inflation rising to 3.7% year-over-year in September (up from 3.4% in August).
15 Oct 2026Morning Market Brief – 2026-10-15The US Consumer Price Index (CPI) for September rose by 0.6% month-on-month and 3.7% year-on-year, slightly exceeding market expectations (3.6%).

In other languages

PLinflacja CPI DEVerbraucherpreisindex FRindice des prix à la consommation ESíndice de precios al consumo ITindice dei prezzi al consumo

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