2024 US Inflation Indicator: How Does CPI Data Affect Your Investment?

Why Do Investors Keep an Eye on the US CPI Release Time?

The US Consumer Price Index (CPI) is a barometer for global asset markets. Whenever the CPI release time approaches, markets tend to become restless in advance. This is no coincidence — CPI data directly influences Federal Reserve decisions, and the Fed’s actions then determine the movements of stocks, bonds, and exchange rates. Simply put, the timing of the US CPI release is a turning point for market sentiment.

Compared to the PCE index, which the Fed pays more attention to, CPI is released earlier, making it the market’s first response target. An unexpectedly high or low CPI report can trigger sharp asset price swings within minutes.

2024 US CPI Release Schedule (Taiwan Time)

To accurately grasp market rhythm, the first step is to remember this schedule:

Core Logic: The US CPI is usually released on the first business day of each month or the closest business day. The timing adjusts for daylight saving time. In winter months, it’s at 21:30; in summer months, at 20:30. Remember this rhythm to avoid missing market moves.

CPI vs Core CPI vs PCE: The Triangular Relationship Investors Must Understand

There are three types of inflation data that can be confusing; mixing them up can lead to misjudging the market:

US CPI vs Core CPI: CPI includes food and energy (high volatility, noise), while Core CPI excludes these two categories (better reflects true trend). Simply put, watching Core CPI helps understand the real economic situation, but the market reacts more intensely to total CPI.

CPI vs PCE: The biggest difference lies in their calculation methods. CPI uses fixed weights; PCE uses chain-weighting. What’s the result? PCE better captures substitution effects — when oil prices rise, consumers drive less, and weights adjust automatically. So, PCE is “smarter,” but CPI is released first, so markets react earlier.

Year-over-Year vs Month-over-Month: To see trends, look at YoY (excluding seasonal effects). To catch the latest movements, look at MoM. Investors should monitor both but focus on YoY.

The two most critical figures for investors: US CPI Year-over-Year (most market reaction) and US PCE Year-over-Year (Fed’s decision basis). These two data points usually move in the same direction, but PCE is released later, giving smart capital a time advantage.

Composition of CPI: Identifying the Source of Market Movements

US CPI isn’t created out of thin air; it’s composed of these main components:

• Housing-related (30-40%): Rent costs are the biggest factor, directly affecting consumers’ wallets.
• Food and beverages (13-15%): Daily essentials, sensitive to fluctuations.
• Energy (6-8%): Direct reflection of oil prices.
• Medical healthcare (7-9%): Long-term rising costs.
• Transportation (5-6%, including new and used cars): Signals from oil prices and auto markets.
• Others (education, entertainment, communication, etc.): Smaller proportions.

Understanding this composition is crucial. Housing and food account for nearly 50%; their fluctuations drive CPI movements. To predict CPI trends, focus on rent and food prices — they’re the key indicators.

How Will CPI Move in 2024? Three Major Factors Determine the Year’s Direction

Factor 1: The US Economy Itself

IMF forecasts US GDP growth of 2.1% in 2024, with a global inflation rate of 5.8%. The economy isn’t weak, and inflation won’t plummet sharply. This suggests CPI is unlikely to fall steadily into single digits; there’s support at the bottom.

Factor 2: The Battle of Commodity Prices

Crude oil inventories are currently declining, supporting oil prices. Since commodity prices already fell significantly in the first half of 2023, CPI in the first half of 2024 will face upward pressure due to low base effects last year. In other words, the low base effect will prevent CPI from continuing to decline rapidly.

Factor 3: Geopolitics and Logistics Costs

The Red Sea crisis has disrupted global supply chains. Shipping costs along Eurasian routes have more than doubled. Although this impact isn’t as severe as the Suez Canal incident in 2021, ongoing increases in logistics costs will eventually pass through to consumer prices, exerting upward pressure.

Three-Stage Forecast for CPI Trends in 2024

Based on the above factors, US CPI in 2024 is expected to show a “V-shaped rebound”:

Stage 1 (Q1): CPI bottoms out. This will be the lowest point of the year, with market expectations favoring rate cuts.

Stage 2: CPI rebounds. Low base effects, oil support, and rising logistics costs will push CPI upward. This may disrupt market expectations of Fed rate cuts.

Stage 3 (H2): CPI declines again. As base effects fade and economic slowdown possibly occurs, CPI will trend downward but won’t return to Q1 lows.

Implication for Investors: Those who are bearish on CPI and bullish on bonds in the early stage should be cautious in Q2. The Fed’s rate cut pace may be more moderate than market expects. CME data shows the market generally anticipates a 6-basis-point rate cut in 2024, but this outlook might need adjustment.

Final Reminder: Why Monitor CPI Release Time in Advance

Every month’s CPI release is a market battleground. Knowing the release time in advance, preparing data expectations, and thinking through responses can help maintain composure amid volatility.

Especially in Q2, when CPI data may surprise to the upside, investors who lack awareness of the release schedule and data sensitivity are likely to be caught off guard. Remember: being one step ahead in knowing the CPI release time and data composition allows you to seize investment opportunities first.