XT Research: The U.S. Department of Labor is about to release the U.S. CPI year-on-year rate for May, unadjusted for seasonal factors.
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XT Research: The U.S. Department of Labor is about to release the U.S. CPI year-on-year rate for May, unadjusted for seasonal factors.
XT Research reminds you to pay attention to macroeconomic data.
Navigating Web3 tides with focused insightsAt 8:30 PM Singapore time on June 12, 2024, the U.S. Department of Labor will release the U.S. unadjusted CPI year-on-year rate for May 2024 and the seasonally adjusted month-on-month CPI for May 2024. Among these, the unadjusted year-on-year CPI is more closely watched by markets.
Frequency: Monthly
Data meaning: The U.S. Consumer Price Index (CPI) measures changes in the price level of a basket of goods and services, reflecting inflation trends. Understanding the relationship between the year-on-year (annual) and month-on-month (monthly) CPI rates helps us better interpret inflation dynamics. Below are their differences and relationships:
1. CPI Year-on-Year Rate
Definition: The percentage change in CPI compared to the same month of the previous year.
Calculation method: For example, the May 2023 CPI year-on-year rate is calculated by comparing the CPI of May 2023 with that of May 2022.
Significance: Reflects overall price trends over a one-year period and serves as a key indicator of long-term inflation.
2. CPI Month-on-Month Rate
Definition: The percentage change in CPI compared to the previous month.
Calculation method: For example, the May 2023 CPI month-on-month rate is calculated by comparing the CPI of May 2023 with that of April 2023.
Significance: Reflects short-term price movements within one month and is an important metric for analyzing recent inflation trends.
How Do Media Use CPI Data?
When reporting CPI data, some media outlets may selectively highlight either the monthly or annual figures to attract attention. For example:
Emphasizing the year-on-year rate: If the annual rate rises sharply, media might highlight this with headlines like "Inflation hits X%, reaching a new high."
Emphasizing the month-on-month rate: If there's an unusual monthly fluctuation (such as a sudden spike or sharp drop), media might use it in headlines such as "Prices surge X% this month."
Selective interpretation: Sometimes, media may ignore relatively stable monthly changes or over-interpret annual data to create sensational effects.
Example
Assume the following CPI data:
May 2022: 100
April 2023: 105
May 2023: 107
Calculations:
Year-on-year rate: (107 - 100) / 100 × 100% = 7%
Month-on-month rate: (107 - 105) / 105 × 100% = 1.9%
In this case, media might report "inflation reaches 7%" to emphasize long-term high inflation while downplaying the fact that the monthly increase was only 1.9%, or vice versa.
Understanding the distinction and relationship between CPI year-on-year and month-on-month rates enables us to grasp inflation data more comprehensively and view media reports more rationally, avoiding being misled by exaggerated headlines.
Market impact: If actual values are lower than expected—for example, if the U.S. unadjusted CPI year-on-year rate comes in at 3.3% versus an expected 3.4%, and the seasonally adjusted month-on-month rate is 0.1% versus an expected 0.3%—it would be bearish for the U.S. dollar and bullish for non-U.S. currencies. It would also be bearish for Treasury yields, increase expectations of rate cuts, reduce expectations of rate hikes, and benefit risk markets including cryptocurrency markets.
Attention level: 🌟🌟🌟🌟🌟
Data source: Jinshi Data
*Not intended as investment advice
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