Consumer Price Index (CPI): How is US CPI calculated even and what is CPI? (2023 CPI Schedule UPDATED)
How does US CPI work? CPI research in BitKan Learn and CPI Schedule 2023: Learn more about CPI and 2023 CPI Numbers
As economies turn in for the worse, it appears that CPI figures become more relevant in our daily investing and trading decisions — as you may have known by now, inflation is eating up a lot of our expenditure and this expenditure may be related to food, lifestyle, entertainment…you name it.
Similarly, the consumer price index (CPI), which acknowledged by Economic Times as a “comprehensive measure used for estimation of price changes in a basket of goods and services representative of consumption expenditure in an economy”.
But what even constitutes the basket of goods? In this series of BitKan Learn, we will learn a bit more about what is the US CPI, how to calculate CPI…and why CPI affect markets the way we see it right now.
What makes up CPI? How to calculate CPI?
Visually, the basket of goods forming the CPI make up can be seen below by Mayhem4Markets’ tweet, and originally from PewResearch:
From a cursory first glance, shelter and food makes up quite a huge percentage of CPI (~45%). However, let me bring attention to you that this CPI is updated as of November 2021. What this entails is the fact that whatever you see here as the “basket of goods” will change accordingly, and this means:
- The calculation involved in the estimation of CPI is quite rigorous. Various categories and sub-categories have been made for classifying consumption items and on the basis of consumer categories like urban or rural. From these indices and sub-indices obtained, the final overall index of price is calculated mostly by national statistical agencies.
- What is in the basket of goods can change depending on the situation and items that are necessary to make the calculation accurate: https://www.youtube.com/watch?v=tMgHQw283WU
- That the CPI is a statistical estimate that is subject to sampling error because it is based upon a sample of retail prices and not the complete universe of all prices.
In fact, if you take a look at August 2022’s CPI for all urban consumers, you can see the metric “relative importance” having 4 decimal points — this changes every time and it is important to consider what items inflate more than others.
Hence, when a blanket figure such as “CPI Index is 8.3%” is announced, one has to take note that it is the all items index, and not that every single item in the US inflated by 8.3% in value.
How US CPI data affects crypto markets
US CPI data and all other CPI data in general can affect crypto markets and traditional market sentiments because high inflation numbers could lead to further interest rate hikes by the US Federal Reserve.
High inflation (e.g. CPI numbers are very high) = further interest rate hikes = fed tightening = economy shrinks
Crypto experts believe that heightened inflation numbers may once again send the crypto markets into a tailspin due to Fed tightening fears. This is because an upside inflation surprise would impact heavily on risk assets like stocks and crypto.
As for the current situation, the numbers are so high that a lower or even a stable CPI reading will surprise everyone with indications of US economic cooling. If CPI numbers start going down, crypto markets may witness an upward movement.
CPI Schedule 2023
The dates for CPI for the remainder of 2023 are as follows:
- January 2023 CPI data is scheduled to be released on February 14, 2023, at 08:30 AM Eastern Time.
- February 2023 CPI data is scheduled to be released on March 14, 2023, at 08:30 AM Eastern Time.
- March 2023 CPI data is scheduled to be released on April 12, 2023, at 08:30 AM Eastern Time.
- April 2023 CPI data is scheduled to be released on May 10, 2023, at 08:30 AM Eastern Time.
- May 2023 CPI data is scheduled to be released on June 13, 2023, at 08:30 AM Eastern Time.
- June 2023 CPI data is scheduled to be released on July 12, 2023, at 08:30 AM Eastern Time.
- July 2023 CPI data is scheduled to be released on August 10, 2023, at 08:30 AM Eastern Time.
- August 2023 CPI data is scheduled to be released on September 13, 2023, at 08:30 AM Eastern Time.
- September 2023 CPI data is scheduled to be released on October 12, 2023, at 08:30 AM Eastern Time.
- October 2023 CPI data is scheduled to be released on November 14, 2023, at 08:30 AM Eastern Time.
- November 2023 CPI data is scheduled to be released on December 12, 2023, at 08:30 AM Eastern Time.
Sources:
Actual US CPI for August 2022 — https://www.bls.gov/news.release/pdf/cpi.pdf
PewResearch: As inflation soars, a look at what’s inside the consumer price index — https://www.pewresearch.org/fact-tank/2022/01/24/as-inflation-soars-a-look-at-whats-inside-the-consumer-price-index/
What is ‘Consumer Price Index’ — https://economictimes.indiatimes.com/definition/consumer-price-index
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