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If a CPI or Retail Sales Number is different from the Core Number what one should I focus on.
If a CPI or Retail Sales Number is different from the Core Number what one should I focus on. Lets say the full report is way out of expections in a big positive way but the core is out of expections a little in a negative way. both reports are out of expections one more than the other. but which one do you follow.
over 2 years ago
Best Answer - Chosen by Voters
I think CPI is totally useless. I really don't understand why they even take the time to print this data any more, given all the hedonic adjustments that have been made to the data over the years.
Inflation is what you experience... It has nothing to do with what the Gov't says it is.
It's you knowing that you pay more for medications, insurance, books, tuition, and bubble gum that's the real inflation!
I'd pay more attention to the the core price index for personal consumption expenditures (PCE). That's the Fed's preferred inflation gauge.
over 2 years ago
Answers (2)
Many suggest that you follow the core report because that is normally what central bank analysts follow since the items included are less volatile in nature. You should of course, look at the bigger picture. See if there were any revisions in previous releases - this may indicate why there was a big increase in the report this month.
Also, try digging deeper and finding out why there would be such a big difference in the two reports. For example, maybe headline data surged because of a pick up in the automobile industry because of the effects of certain government programs. Or maybe the rising price of crude oil helped CPI figures increase as well.
One thing you can also do is to look at the reaction to the reports. As a trader, this will help you gauge what other traders and experts feel about the report. Just be careful if you are trying to trade the report - you might get whiplashed if traders are unsure of what to do with the results of the report! Best thing may be to just sit out first and see what the real reaction is.
over 2 years ago
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It depends on the market actually. By the time both headline and core accounts are released, the market already has reacted to them. So to know what the market at that time focuses on, check the immediate price action.
over 2 years ago
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