The index monitors retail price changes for goods and services included into the consumer goods basket. The index calculation includes food and clothing prices, education expenditures, as well as prices for public health services, transportation, utility payments and leisure. The index is a monthly calculated value and is the basic indicator of the inflation rate in any country including the US.
It is considered to be the most important inflationary indicator.
The high rate of inflation raises the chances of the bank’s rate increase by the national Central Bank. Low inflation rate allows for more active economic stimulation by the Central Bank, and decreases the bank rate or applies quantitative easing in particular (when it is necessary).
Effect of market
The index growth or the actual value rise, exceeding the forecast is a positive sign for the Dollar.
Significant forecast variations may have a strong influence on the American currency dynamics.