Consumer Price Index

Consumer Price Index

The consumer price index determines the rate of inflation from the point of view of consumers when they buy goods and services. This index is also considered one of the most important indicators that traders monitor and is considered a basic indicator for determining financial inflation and buying trends in society in the United States.
The main goal that the central bank seeks is to achieve price stability, and among the ways to fight inflation, the central bank seeks to raise interest rates to help prices fall. Higher interest rates attract foreign investment, thus increasing the demand for the country's currency
The annual rate of inflation in the United States probably slowed for the sixth consecutive month to 6.5% in December 2022, the lowest level since October 2021, and compared to 7.1% in November. On a monthly basis, the CPI is seen to be flat, after four straight months of increases, and compared with a 0.1% rise in November. Lower energy prices are likely to be the biggest cause of the slowdown, as gasoline costs fell nearly 12% from November to December. Meanwhile, the annualized core rate is expected to drop to 5.7%, the lowest in a year, while the monthly rate is rising slightly faster at 0.3% versus 0.2% in November. Inflation appears to have peaked at 9.1% in June 2022 but is still three times higher than the Fed's target of 2% and continues to point to a widespread increase in the general level of prices, specifically in the services sector.

Outlook for today's statement and how it will affect the currency

Expectations indicate that inflation data will decline to a rate of 6.5%.
If the statement is issued below expectations, it will affect the currency in a negative way, but if the statement is issued at a rate higher than expected, it will affect the currency in a positive way

Core Consumer Price Index

The core consumer price index is derived from the consumer price index and measures the change in the prices of goods and services, excluding food and energy
US core consumer prices, which exclude volatile items such as food and energy, rose 0.2% from the previous month in November 2022, down slightly from a 0.3% rise in the previous month and below market estimates of a 0.3% increase. It was the smallest increase in core consumer prices since August of 2021. Shelter, communications, entertainment, auto insurance, education, and apparel were among those that increased during the month, while used cars and trucks and medical indexes were. Care, airline tickets prices declined. On an annual basis, core consumer prices rose 6.0% in November from 2022, slowing from a 6.3% increase in October and below market estimates for a 6.1% rise.

Outlook for today's statement and how it will affect the currency

Expectations for the core CPI release today are 0.3%.
If the statement is issued below expectations, it will affect the currency in a negative way, but if the statement is issued at a rate higher than expected, it will affect the currency in a positive way

The timing of the release of the consumer price index data

Inflation data will be released at exactly 4:30 pm Mecca Al-Mukarramah time

How the results of the inflation data will affect the Federal Reserve's policy in the upcoming meetings

First Scenario

In the event that the basic consumer price index recorded a rate lower than expectations, which indicates 0.3%, and the decline in the consumer price index continued, it will raise the possibility of reducing the rate of interest rate hikes by the Federal Reserve in the next meeting, which will negatively affect the US dollar.

Second Scenario

In the event that the core consumer price index recorded a rate higher than the expectations of 0.3%, and the rise in the consumer price index will support the possibility of raising interest rates by the Federal Reserve at the next meeting, which will positively affect the US dollar