Individual Stocks

Inflation and the Consumer Price Index

How does CPI affect the investing community?

The release of CPI data and subsequent reports are used by the investing community to ascertain the values of various fixed income securities in the pricing of bonds and the values of pension plans. The equity markets also take into consideration a rather steady or fairly predictable change in overall prices in an economy. But if prices rise too much—if the costs of goods and materials used by companies to make products ultimately increase—this can suppress profits for those companies, as products produced become more expensive. Also, products that are sensitive to price movements may see a decline in demand, as prices increase.



Close

This is a web preview of the "The Handy Investing Answer Book" app. Many features only work on your mobile device. If you like what you see, we hope you will consider buying. Get the App