What is it?
The CPI is the most popular indicator of inflation in the US. Inflation is the rate at which prices for goods and services, in general, are rising. As prices rise, purchasing power falls. This has ramifications throughout the financial markets. In the bond markets, inflation threatens the value of bond principal and any future interest payments. As a result, when inflation increases, bond investors insist on higher rates of return in order to "keep up" with inflation.
The "core CPI" excludes food and energy prices, which are considered volatile. This evens out the index somewhat. Many find the core index more useful in measuring trends.
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