XT Research Institute reminds you to pay attention to macroeconomic data.
At 20:30 on June 12, 2024, Singapore time, the US Department of Labor will release the following data: US May Non-Seasonally Adjusted CPI YoY, US May Seasonally Adjusted CPI MoM, with the US May Non-Seasonally Adjusted CPI YoY being of greater market interest.
Release frequency: Monthly
Data meaning: The Consumer Price Index (CPI) in the United States is an indicator that measures the level of price changes for a basket of goods and services, used to reflect the inflation situation. Understanding the relationship between the YoY (year-on-year) and MoM (month-on-month) CPI can help us better understand the trend of inflation. Below are the differences and relationships between them:
1. CPI YoY (year-on-year)
Definition: The percentage change in CPI compared to the same month of the previous year.
Calculation method: For example, the CPI YoY for May 2023 is calculated by comparing the CPI for May 2023 with the CPI for May 2022.
Significance: Reflects the overall trend of price changes over a year, an important indicator for measuring long-term inflation.
2. CPI MoM (month-on-month)
Definition: The percentage change in CPI compared to the previous month.
Calculation method: For example, the CPI MoM for May 2023 is calculated by comparing the CPI for May 2023 with the CPI for April 2023.
Significance: Reflects the short-term trend of price changes within a month, an important indicator for analyzing recent inflation changes.
How does the media use CPI data?
Some media outlets, when reporting CPI data, may selectively use MoM or YoY data to attract attention. For example:
Emphasizing YoY: If the YoY rises significantly, the media may highlight this point, and the headline may be "Annual inflation rate reaches X%, hitting a new high."
Emphasizing MoM: If the MoM shows an exceptional fluctuation (such as a one-time surge or sharp decline), the media may use this point, and the headline may be "Prices surge by X% this month."
Selective interpretation: Sometimes, the media may ignore relatively stable monthly changes, or overinterpret annual changes to create sensational effects.
Example
Assuming the following CPI data:
May 2022: 100
April 2023: 105
May 2023: 107
Calculation:
YoY: (107 - 100) / 100 * 100% = 7%
MoM: (107 - 105) / 105 * 100% = 1.9%
In this case, the media may report "Annual inflation rate reaches 7%" to emphasize the long-term high inflation trend, while ignoring the fact that the MoM is only 1.9%, or vice versa.
Understanding the difference and relationship between YoY and MoM CPI can help us more comprehensively understand inflation data and also help us take a more rational view of media reports, avoiding being misled by exaggerated news headlines.
Data impact: If the released values differ from the expected values, for example: US May Non-Seasonally Adjusted CPI YoY released value 3.3% vs. expected 3.4%, US May Seasonally Adjusted CPI MoM released value 0.1% vs. expected 0.3%, it would be bearish for the US dollar, bullish for non-US currencies, bearish for bond yields, bullish for rate cut expectations, and bearish for rate hike expectations. It would be bullish for the risk market and the cryptocurrency market.
Focus index: 🌟🌟🌟🌟🌟
Data source: FXStreet
Not intended as investment advice
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