Consumer Price Index (CPI), explained

FRED series

CPIAUCSL

all urban consumers, all items

Frequency

Monthly

seasonal ups and downs smoothed out

Our unit

YoY %

change on the same month a year earlier

Target zone

1–2.5%

green band on our chart

A monthly measure of how much a fixed basket of everyday goods and services costs, compared to what the same basket cost a year earlier. Groceries, rent, gasoline, medical care, apparel — the US Bureau of Labor Statistics prices the same representative basket every month and reports the change.

When you hear “inflation came in at 3%,” that number is, in the vast majority of cases, this release — specifically the year-over-year change in the headline index. It is the single most widely quoted inflation figure in financial media.

We take the FRED series CPIAUCSL — CPI for All Urban Consumers, All Items, with the usual seasonal ups and downs smoothed out — and show it as the change on the same month a year earlier rather than the raw index level. That year-over-year line is the chart's default view.

The chart also lets you switch how it is measured — month-on-month change, the raw index level itself, or a quarterly or annual view — because FRED publishes all of those. Year-over-year is the one virtually everyone means when they cite “CPI,” so it is the default.

The basket is not a single item — it is hundreds of categories of spending, each weighted by how much of the average household budget it represents. Housing carries the largest single weight, followed by transportation, food and energy. Every category is priced every month, weighted, and combined into one index value.

The published percentage is simply that index value today versus the same index twelve months ago, expressed as a percent change. It compresses hundreds of individual price movements — some rising, some falling — into a single headline figure, which is exactly why the number can feel disconnected from any one person's actual cost of living.

We draw four horizontal bands behind the line, each an editorial reading rather than an official policy trigger. Below 1% is shaded blue — disinflation or outright deflation risk. 1% to 2.5% is green, our rough read of the zone the Fed is comfortable in given its roughly 2% long-run target. 2.5% to 4% is yellow — elevated, worth watching. Above 4% is red — the zone associated with active tightening pressure.

CPI is released on a fixed monthly schedule set by the BLS, and it is one of the most consistently market-moving data points on the macro calendar — for rates, equities, and crypto alike. The mechanism runs through the Federal Reserve: CPI is one of the inputs the Fed weighs when deciding whether to hold, cut, or raise interest rates.

Hotter, more persistent readings raise the market's odds of tighter policy staying in place for longer, which has historically pressured riskier assets including Bitcoin. Cooler readings raise the odds of easier policy ahead, which has historically supported them. That is a directional relationship traders position around, not a mechanical rule — plenty of other forces move price on any given day, CPI release or not.

CPI does not tell you what Bitcoin will do. It tells you what the Fed is more or less likely to do next — and markets have spent decades trading that gap.

CPI includes food and energy prices, both of which are volatile month to month for reasons that have little to do with underlying inflation trends — a refinery outage or a bad harvest can move the headline number without saying much about the broader economy.

Core PCE, which strips food and energy out, is the Federal Reserve's preferred gauge of underlying inflation; its 2% goal is defined on the headline PCE price index, not core PCE. CPI gets released earlier and draws far more headline attention, but Core PCE typically carries more weight inside the Fed's actual decision-making. We publish Core PCE as a separate chart for exactly that reason — the two measures can and do move apart, and reading only one gives an incomplete picture.

CPI is a macro context indicator, not a cycle-timing one. It says nothing about where Bitcoin sits in its own market cycle, whether on-chain holders are in profit, or how stretched price is relative to trend — that work is done by the cycle indicators on our Heatmeters.

What CPI does is set the backdrop those cycle indicators operate in. It is not currently a weighted input to the Bitcoin or Ethereum Heatmeter composite score — it sits alongside Core PCE, the Fed Funds Rate and the Fed balance sheet in our standalone macro chart set, there for anyone who wants to read the liquidity and policy environment for themselves rather than have it folded into one number.

Others in macro — Interest rates and the supply of money — the backdrop crypto ultimately trades against.

• Core PCEThe inflation measure the Federal Reserve actually targets.
• Unemployment RateLabour-market slack — half of the Fed’s dual mandate.
• Real GDPEconomic growth after inflation, quarter by quarter.
• NFCIA single index of how loose or tight US financial conditions are overall.
• ISM Manufacturing New OrdersForward-looking factory demand, one of the earliest turns in the business cycle.

Every indicator we track — the full glossary.