Breaking: US CPI inflation declines to 3.4% in April as expected
Inflation in the US, as measured by the change in the Consumer Price Index (CPI), declined to 3.4% on a yearly basis in April from 3.5% in March, the US Bureau of Labor Statistics (BLS) reported on Wednesday. This reading came in line with the market expectation of 3.4%.
WHAT IS THE US CPI?
The Consumer Price Index released by the US Bureau of Labor Statistcs is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).
WHY IT MATTERS TO TRADERS?
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Comments