What Is CPI vs WPI? How Inflation Data Moves Markets (Beginner’s Guide)
Every month, when inflation data is released, stock markets often move sharply. You may see headlines like: “Eurozone CPI rises 0.7% month-on-month” “India WPI inflation cools” “US inflation higher than expected” But what do these terms actually mean? Let’s understand CPI vs WPI in simple language — and why inflation data moves markets. What Is CPI (Consumer Price Index)? CPI measures the change in prices of goods and services at the consumer level. In simple words, it tracks how much more (or less) you are paying for: Food Rent Fuel Transport Medical services Education CPI reflects the inflation that common people actually experience in daily life. Example If Eurozone CPI rises 0.7% month-on-month, it means prices increased 0.7% compared to the previous month. If inflation rises too quickly: Central banks may increase interest rates Borrowing becomes expensive Business growth slows Stock markets may correct Because higher interest rates reduce future profit expectations. What Is WPI (...