The CPI is also available by size of city, by region of the country, for cross-classifications of regions and population-size classes, and for many metropolitan areas.

Importance
The CPI is the most widely followed monthly indicator of inflation. The consumer sector accounts for two-thirds of economic activity. The CPI is considered a cost-of-living measure, since it is used to adjust contracts of all types that are tied to inflation.

Interpretation
The bond market will rally when increases in the CPI are small, but bond prices will fall when the gains are larger-than-expected. The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.

Notwithstanding its faults, the consumer price index is the most widely followed measure of inflation in the United States. Labor contracts are tied to changes in the CPI; social security payments are tied to the CPI; and even tax brackets are tied to the consumer price index. A Congressionally appointed commission determined that the CPI overstates the true underlying inflation rate by as much as one percentage point. Although this finding was disputed by the Bureau of Labor Statistics which calculates the index, they are always in the process of improving the methodology of calculating the CPI. In January 1999, The BLS introduced a new formula for calculating the index which has a tendency to reduce the annual inflation rate by 0.2 percentage points.

The consumer price index fluctuates less than the PPI because changes in prices of services-which hold a larger portion than goods in this index-are more stable than commodity prices. Nonetheless, economists and financial market participants still prefer to monitor the CPI excluding food and energy prices for its monthly stability. Food and energy prices account for roughly one-quarter of the CPI.

Usually, when investors refer to the real rate of interest, they use the interest rate such as the 30-year Treasury bond and subtract the year-over-year rise in the CPI to calculate it. Consumer prices rose 1.7% from January 1998 to January 1999; the 30-year Treasury bond averaged 5.16% in January, putting the real rate at 3.46% for the month.

Frequency
The CPI is the most widely followed monthly indicator of inflation. The consumer sector accounts for two-thirds of economic activity. The CPI is considered a cost-of-living measure, since it is used to adjust contracts of all types that are tied to inflation.

Source
Bureau of Labor Statistics, U.S. Department of Labor.

Availability
Usually during the second or third week of the month.

Coverarge
Data are for the previous month. (Data for June are released in July.)

Revisions
Monthly, none.

Annually, new seasonal adjustment factors are introduced in February with the release of January data. This revision affects the last five years of data. The magnitude of revisions is minor.