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Forex Glossary Index: A | B | C | D | E | F | G | H | I | K | L | M | N | O | P | Q | R | S | T | U | V | W | Y
Consumer Price Index (CPI)Consumer Price Index (CPI) is a key economic indicator for measuring the level of inflation in a country or territory. It is calculated from average changes in the prices of goods and services bought by consumers. Most central banks set targets of controlling CPI to certain level in order to maintain price stability. If CPI surpasses the targeted level, a central bank would often raise interest rate to combat inflation. The expected or actual raise of interest rate in turn push up the value of the associated currency. Therefore, a greater-than-expected increase or a smaller-than-expected decrease in normally leads to appreciation of the associated currency in forex trading, whereas a greater-than-expected decrease or a smaller-than-expected increase in CPI normally leads to depreciation of the associated currency.
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