Stock market investors will not only be keenly watching the December 2022 CPI data but will also look forward to the January inflation numbers which will for the first time reflect the new methodology. “All major indexes have opened in green and tech stocks are likely to see more gains as Nasdaq closed higher in the last three sessions on the trot. However, more focus will remain on the consumer price inflation report due on Thursday. Hence, it is also probable that traders will not try out anything extravagant and trading is expected to remain somewhat subdued during the day,” says Kunal Sawhney, CEO, Kalkine Group.
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The US inflation numbers for December 2022 are to be released by the Bureau of Labor Statistics (BLS) on January 12. Going forward, there will be a change to the method used to calculate US CPI. December 2022 CPI data is being calculated as per the existing model.
The Bureau of Labor Statistics will change the method of calculation of inflation data from 2023. The release of the January 2023 CPI data, which is slated for Friday, February 10, 2023, will mark the beginning of the switch to yearly weights. With the release of January 2023 in February, the CPI for ‘new vehicles’ will introduce a methodology improvement to the time series filter that estimates the most recent cyclical trend and short-term fluctuations.
The BLS will update the Consumer Price Index weights annually based on a single calendar year of data, utilizing consumer expenditure data from 2021, starting with the February 2023 publication of CPI data for January 2023.
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In order to improve the accuracy and usefulness of the Consumer Price Index (CPI), the BLS has planned to update spending weights on an annual basis using information from a single calendar year. This differs from the prior method, which updated weights using two years’ worth of expenditure data every two years. When the US CPI index for January 2023 is calculated using data on consumer spending from 2021, this revision will go into effect.
The CPI for urban consumers (CPI-U), wage earners, and clerical workers (CPI-W), initial and interim versions of the Chained CPI-U, and CPI research series, will get impacted. This change will also affect some CPI documents, including the CPI Relative Importance tables Report and the CPI Handbook of Methods.
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Better than anticipated, the US consumer price index (CPI) report for November, which was released on December 13, showed headline inflation at 0.1% month over month and a favourable 7.1% year-over-year reading compared to October’s 7.7% figure. Food and energy prices are excluded from core inflation, which increased by 0.2% from the previous month but decreased from 6.3% to 6.0% year over year.