What is the CPI or Consumer Price Index?
The Consumer Price Index (CPI) is a measure of the price changes in consumer goods and services such as food, clothing and health care. Changes in CPI are used to evaluation changes in price and they give a good idea about the cost of living. The CPI is also referred to as "headline inflation" every now and then.
Why You Care
It is a leading indicator of inflation and the purchasing power of a country's currency diminishes when the CPI rises. Additionally, an increase in CPI generally results in an appreciation in a country's currency, indices and equities.
In the United States, a higher CPI value often reduces the buying power of the U.S. Dollar and the Fed could intervene by raising the interest rate.