Did you know that a single number can move global markets?

This number is the Consumer Price Index (CPI), the vital nerve for measuring inflation and the cost of living.

🔹The CPI measures the change in prices of a basket of essential goods and services such as housing, food, and transportation, and it is calculated in three ways:

🔸Laspeyres (based on base period quantities)

🔸Paasche (based on current quantities)

🔸Fisher (geometric mean of the two)

When the CPI rises, it indicates higher inflation, which may prompt central banks to raise interest rates, directly impacting currency strength, stock markets, and even cryptocurrencies.

🔻Why does it matter to traders?

Because any deviation from expectations (whether positive or negative) triggers quick fluctuations that can be exploited in currency and stock trading.