The Consumer Price Index (CPI) is a key economic indicator that measures the changes in the price of a basket of goods and services consumed by households in the United States. The report is released by the Bureau of Labor Statistics (BLS) monthly and is closely watched by investors, policymakers, and economists.
The January 2023 CPI report is scheduled to be released on Thursday, January 12, 2023, at 8:30 am ET. It will provide information on the changes in prices for a wide range of goods and services, including food, housing, transportation, healthcare, and more.
The CPI is based on the prices of a representative sample of goods and services from a variety of locations and retailers throughout the country. The BLS collects price data from approximately 23,000 retail and service establishments, including online and brick-and-mortar stores.
The CPI report also includes the “core” CPI, which excludes food and energy prices due to their volatility. The core CPI is considered a more reliable indicator of long-term inflation trends because food and energy prices can fluctuate significantly due to factors such as weather and global demand.
Key Dates:
12 Jan: CPI for December
25th Jan: Tesla Earnings
26th Jan: Apple Earnings
26 Jan: GDP Report
1 Feb: FOMC Decision
The CPI is used in a variety of ways, including to adjust social security payments, to index tax brackets, and to adjust interest rates on adjustable-rate mortgages. It is also used to adjust the value of financial instruments such as bonds, which often include provisions for adjusting the principal or interest payments based on changes in the CPI.
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Reflection of CPI report on US economy
One of the key things to watch in the January CPI report is the overall level of inflation. Inflation is an important factor in the economy, as it can impact the value of money and the purchasing power of consumers.
If inflation is too high, it can erode the value of money and make it more difficult for people to afford the things they need. On the other hand, if inflation is too low, it can lead to stagnant economic growth and deflation.
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Analysts are expecting to see modest levels of inflation in the January CPI report. According to a survey of economists by Bloomberg, the consensus forecast is for a 0.3% increase in the overall CPI, which would be in line with the average rate of inflation over the past year.
Consensus is 6.6%. What is your prediction? Drop it in a vote in the tweet below
The consensus estimate for Thursday’s inflation report is 6.6% (overall US CPI YoY in December), down from 7.1% in November and the 40-year high of 9.1% last June.
The actual number will be…
— Charlie Bilello (@charliebilello) January 10, 2023
One important factor to consider when interpreting the CPI and other price indexes is the concept of substitution bias. Substitution bias occurs when consumers change their purchasing patterns in response to changes in prices. For example, if the price of beef increases, consumers may switch to a cheaper protein source such as chicken. This can cause the CPI to understate the true increase in the cost of living.
