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 consumer price index is the most widely followed monthly indicator of inflation. The CPI is considered a cost-of-living measure since it is used to adjust contracts of all types that are tied to inflation. 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.

Interpretation
The bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.

Federal Reserve chairman Alan Greenspan mentioned in 1999 that he monitors the PCE (personal consumption expenditure) deflator more closely than the CPI because it is a better measure of the true cost of living. However, it is important to remember - and many analysts forget this key point - that the CPI is used for several components of the PCE deflator. Thus, it still has a lot of value to economists, policymakers and financial market players. The Labor Department compiles this index and makes ongoing improvements to this indicator. Notwithstanding its faults, the consumer price index remains the most widely followed measure of inflation in the United States.

Economic data tends to be volatile from month to month; the CPI is no exception. Large fluctuations in the consumer price index are due to the food and energy components. Weather conditions affect both to a large extent. OPEC, the oil cartel, also affects energy prices. As a result, economists and financial market participants prefer to monitor the CPI excluding food and energy prices for its greater monthly stability. This is also referred to as the "core" CPI. Food and energy prices account for roughly one-quarter of the CPI.

The consumer price index has evolved over time as consumer expenditures changed. Commodities now make up only 42 percent of the index and the remaining 58 percent are services. It is useful to monitor goods and services separately since prices of goods are more volatile than prices of services.

Usually, when investors refer to the real rate of interest, they use the year-over-year rise in the CPI to subtract from an interest rate, such as the 30-year Treasury bond. Consumer prices rose 3.37 percent from December 1999 to December 2000; the 30-year Treasury bond averaged 5.49 percent in December (2000). The Treasury bond yield less the inflation rate puts the real interest rate at 2.12 percent for the month.

Frequency
Monthly

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.