CPI (Consumer Price Index)

Inflation, the tendency of prices to rise and keep on rising is measured in many countries by the the Consumer Prices Index (CPI). This official measure is calculated each month by taking a sample of goods and services that a typical household might buy, including food, heating, household goods, travel costs. The biggest tool government’s and central bank’s use to control inflation is interest rates. Different central banks have different inflation targets. If inflation is rising above these targets, it often suggests an interest rate hike is more likely. Interest rates are often the central banks and governments biggest tool in controlling inflation. Traders usually increase or decrease bets on rate movements accordingly. If the numbers deviate widely from expectations, the release can provide some big movements.