A new methodology will be used for the first time. The Bureau of Labour Statistics will alter how it computes inflation statistics as of 2023.

For market watchers, analysts, investors, and traders, the US CPI data for January 2023 will be a crucial indicator for determining the pace of price increases in the economy. The US Bureau of Labour Statistics (BLS) will announce the January inflation figures on February 14 at 13:30 GMT.

When creating the January CPI data that will be reflected in US inflation estimates, a new methodology will be used for the first time. The Bureau of Labour Statistics will alter how it computes inflation statistics as of 2023.

The switch to yearly weights will start on Friday, February 14, 2023, with the publishing of the CPI statistics for January 2023.

Beginning with data from January 2023 and utilising consumer spending data from 2021, the BLS proposes to adjust weights for the Consumer Price Index annually based on data from a single calendar year.

This is a change from the old method, which included altering weights every two years based on information from two years' worth of expenses.

Additionally, seasonal adjustment factors are updated each year with the release of the January CPI to account for price changes from the just ended calendar year.

Revisions to the seasonally adjusted indices over the prior five years may be the consequence of this yearly recalculation procedure.

On Friday, February 10, 2023, revised seasonally adjusted indices and seasonal adjustment factors for the months of January 2018 through December 2022 were made accessible.

The following modifications will take effect with the February 2023 release of the January 2023 data:

• The phrase "cable, satellite, and live streaming television service" will replace the previous phrase "cable and satellite television service index."

• Purchase, subscription, and rental of video are now the names of the video discs and other media, including the video index.

• The term "subscription and rental of video and video games" will replace "rental of video discs and other media index."
• Baby food and formula will now be the name of the baby food index.

Inflation decreased from 7.1% in November to 6.5% in December, and now stock market investors anticipate that the annual inflation will continue to trend downward as it has in recent months. Any unfavourable surprise, though, may frighten the market.

Although Fed Chairman Powell has been referring to "disinflation," the robust labour market may jeopardise the Fed's action plan.

Officials at the Fed are still pessimistic and have already hinted at more rate increases if inflation is not completely under control and brought to the target range of 2%.

(Financialexpress.com)