Trading the News with Consumer Price Index

A lesson on the Consumer Price Index (CPI) for active traders and investors in the stock, futures and forex markets.  The CPI is released on the 15th of each month 8:30am and measures the changes in prices paid by urban consumer for the prices of common goods and services.

The speaker provides a comparison of the PPI vs. the CPI.  The key difference between the two lies in the fact that the PPI measures the price changes in the entire output of US producers, including items which are purchased by producers.  The CPI, on the other hand will only provide a measure of goods and services purchased by consumers.  Secondly, imports are excluded from PPI, but included in CPI.  Finally, taxes on goods and services are included in CPI while they are not in PPI.

The CPI is most accurate measurement of inflation in prices of goods and services.  The CPI will not only provide an overall aggregate price level increase but will also within specific sub-groups of goods and services, such as housing, food, and medical expenses. 

The discussion then moves into talking through the two main types of CPI numbers reported, the CPI-W, and CPI-U. 

Core CPI, which is CPI-U - food & energy, is known as the Core CPI and is the most widely watch CPI number.  Food and energy represent the two most volatile components of CPI and are excluded to get a more clear understanding of the price changes of stable goods and services. 
Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...
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