Consumer Price Index Report Coming Tuesday. Watch for Stock Market Response

The CPI and Core CPI reports will be released tomorrow, and these are important indicators for inflation.

The numbers from these reports will help inform the Federal Reserve as to how inflation is moving and if it might be time for interest rate cuts or if they should continue to hold off on those.

Before the report comes out, estimates are already being calculated. These figures may be off slightly, but even the estimates are helping to drive the market. The current headline CPI is expected to increase by 0.43%. The core CPI, which removes figures for energy and food, is expected to go up by 0.32%

CPI measures the cost of goods and services, and it includes figures for both food and energy. Both of these figures help determine where the inflation level is and where it might be headed.

The expectation is that the numbers will trend lower over the coming months. As the figures are released tomorrow, though, those estimates may be adjusted. Determining purchasing trends through CPI data helps investors anticipate where stocks might be headed. The Federal Reserve will also be looking at the Personal Consumption Expenditures Price Index, which it uses to help determine inflation as well.

For February, that figure is expected to be about 0.31%, with a decrease for March. Look for an update on that figure on March 29^th, following another meeting from the Federal Reserve.

Inflation and the Stock Market

Inflation peaked in 2022 and then started to fall heavily by the following year. By mid-2023, the decrease began to be gradual. The Federal Reserve has been watching inflation numbers carefully to help determine when to lower interest rates.

Inflation is at about 3% right now, and the Fed is looking to have that number down to 2% before they make any moves that could negatively affect inflation numbers.

All three major stock market indexes closed down on Friday and are expected to stay low for Monday in anticipation of the CPI reports. Inflation is slowly dropping, but not at a rate that will make the stock markets bullish. Traders will have to rely on a few high performing stocks to keep the markets interesting, especially those in the artificial intelligence and biotechnology sectors.