#CryptoCPIWatch

The Consumer Price Index (CPI) is a key economic tool used to measure inflation and fluctuations in the cost of living by tracking a basket of essential goods and services such as housing, transportation, and food. The index is calculated in three ways: **Laspeyres** (weighted by quantities in the base period), Paasche (weighted by current quantities), and Fischer (geometric mean of the two methods). The results are expressed as a percentage compared to a base period (such as 1984 when the index was 100).

The CPI is closely related to the inflation rate, which is calculated by comparing the change in CPI between two periods. This data is used by central banks to adjust monetary policies, such as interest rates, to achieve economic stability (usually aiming for 2-3% inflation). A rise in CPI above expectations indicates high inflation, which may prompt banks to raise interest rates, strengthening the currency, while a decline may weaken it.

In financial markets, the release of CPI reports is a significant event, as the actual output is compared to expectations and previous results. Unexpected results cause rapid fluctuations; for example, if the CPI exceeds expectations (such as rising to 1.5% instead of 1.3%), markets may buy the currency expected to have its interest rate raised. This index is used in news trading strategies to seize short-term opportunities, especially in currency pairs and stocks sensitive to inflation.