CPI inflation (year-over-year)
CPI YoY
What it is
Annual percentage change in the Consumer Price Index. It's the official monthly inflation measure. Major central banks typically target 2%.
How to read it
CPI > 4% over several months pushes central banks to raise rates. CPI < 1% evokes deflation risk that forces rate cuts. Trajectory (acceleration vs deceleration) matters as much as level.
Common reference points
- Deflation — serious risk< 0%
- Disinflation — central bank happy0 – 2%
- Above target2 – 4%
- High — hawkish pressure4 – 7%
- Extreme — inflation shock> 7%
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
CPI has well-documented biases: under-weights housing (vs PCE), arbitrary basket substitution, etc. Core CPI (ex food/energy) is more stable but less representative of lived experience. Cross with PCE Core, which the Fed officially targets.
Other measures — Macro — inflation
Educational content. Polaris is not a registered investment adviser and makes no recommendation.