The Consumer Price Index (CPI) Has Just Been Released: What It Means for the Markets
The Consumer Price Index (CPI), the key metric used to estimate inflation in the United States, has just been released. The fate of the markets often hinges on US inflation figures, and therefore on the CPI data published today. In this article, we’ll explore what the CPI is, why it matters, and examine the latest figures.
What Does CPI Mean?
Technically, the CPI (Consumer Price Index) is a fundamental economic indicator that measures the change in prices of goods and services typically purchased by consumers. In other words, it tells us how much more (or less) it costs to live today compared to the past.
The CPI is calculated by collecting price data on a representative “basket” of goods and services that consumers commonly buy. This basket includes a variety of essential products, such as food, clothing, housing, transportation, education, healthcare, and other everyday necessities. The US Bureau of Labour Statistics (BLS) collects prices monthly across 75 urban areas and compares them with previous periods.
Why Is It Important?
The CPI is used to measure inflation, which indicates the rate at which the cost of living is rising. If the CPI increases, it means that prices are rising, and, on average, people need to spend more to maintain their standard of living.
Bitcoin and the CPI: What’s the connection?
Over the past week, Bitcoin has repeatedly broken ATHs (all‑time highs), although between Monday 14 and Tuesday 15 the price eased slightly, stabilising—so far—around USD 117 000. There’s no clear driver behind this rally, but some analysts believe the upward surge is essentially speculative anticipation of potential future interest‑rate cuts. In any event, as BTC climbed from USD 112 000 to USD 119 000, spot Bitcoin ETFs recorded a record daily inflow of USD 1 billion.
Putting these capital flows aside, today’s CPI release is significant because it could influence the Federal Reserve’s interest‑rate decisions at the next FOMC meeting (29–30 July). A lower CPI would suggest easing inflation, which might prompt the Federal Reserve to consider cutting rates. Rate cuts typically encourage inflows into risk‑on assets such as equities and Bitcoin. As such, linking Bitcoin and the CPI is more an indirect correlation: investors view the CPI as a barometer for anticipating Fed action.
The last time it happened
When the Fed maintained rates at May levels around mid‑June (17–18 June), Bitcoin’s price barely reacted—because the outcome was widely expected. Indeed, Chair Jerome Powell has conditioned markets to expect a cautious “wait and see” approach: “the Fed will continue to monitor incoming data in line with its dual mandate, namely high employment and low inflation”. Economic uncertainties, particularly around tariffs and geopolitical tensions, remain elevated even if somewhat diminished.
In this context, the Consumer Price Index becomes an essential tool for understanding inflation trends and making informed decisions. A stable or declining CPI could foster a less uncertain economic climate, helping to reduce volatility in Bitcoin and other cryptocurrencies.
Analysis of July 2025 CPI data
On 15 July 2025, the BLS published June 2025 CPI figures. According to the report, monthly CPI rose compared to the previous month, as well as the annual CPI, now at 2.7%, up from 2.4% in June. This figure is significant because year‑on‑year inflation is 2,7%, moving further away the Fed’s 2% target. Naturally, the closer inflation is to the target, the more likely a rate cut becomes.
What do these figures mean?
A MoM change of 0.2% and a YoY change of 0.3% indicates that inflation is rising. The outcome aligns with expectations and reflects forecasts, which had predicted 2,7% YoY. What remains uncertain is how the Fed will respond on interest rates at the FOMC meeting on 29–30 July.
2025 CPI Historical Data
Here’s how the CPI has performed in the early months of 2025:
- July 2025: 2,7 % (forecast 2.7 %)
- June 2025: 2.4% (forecast: 2.5%)
- May 2025: 2.3% (forecast: 2.4%)
- April 2025: 2.4% (forecast: 2.5%)
- March 2025: 2.8% (forecast: 2.9%)
- February 2025: 3.0% (forecast: 2.9%)
- January 2025: 2.9% (forecast: 2.9%)
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