How to Read CPI and the Unemployment Rate

Congress gave the Federal Reserve two jobs: keep prices stable and keep employment as high as the economy can sustain. The Consumer Price Index (CPI) and the unemployment rate are the standard gauges for each. This page explains how to read both and ends with every weekly CPI and jobs analysis we have published.

Recent Readings

• Latest CPI index in our archive: 334.13 for August 2026, +0.40% from July.
• Latest unemployment rate: 4.1% for August 2026, within an archive range of 4.1% to 4.3%.
• Coverage: 12 Thursday sessions from June 25, 2026 to September 10, 2026.

Each month of data our posts have covered so far is below. The change column is the percent move in the CPI index from the prior month, the same way the Bureau of Labor Statistics (BLS) reports monthly inflation.

Turning the CPI Index Into an Inflation Rate

FRED’s CPIAUCSL series is a price level, scaled so that average prices in 1982 through 1984 equal 100. A reading of 330 means the same basket of goods and services costs about 3.3 times what it did then. Inflation is the percent change in that level.

Two changes get quoted. The monthly change compares one month with the month before, using seasonally adjusted data so that holiday discounts or summer airfares do not distort it. The 12-month change compares a month with the same month a year earlier. It is the “inflation is 3%” figure in the news, and the BLS calculates it from the unadjusted index. Monthly changes look tiny until you annualize them.

The Fed’s 2% goal works out to about 0.17% a month. A run of 0.3% or 0.4% prints means inflation is running at roughly double the target or more.

Headline, Core, and PCE

Headline CPI covers the whole basket. Core CPI leaves out food and energy, whose prices swing with harvests, weather, and oil markets. The Fed pays more attention to core because it moves more slowly and says more about where inflation is heading. Shelter, mostly rent and the estimated rental value of owned homes, makes up about a third of the headline index. It is measured from existing leases, so it trails market rents by roughly a year.

The Fed’s formal 2% target, adopted in 2012, is defined on a different measure: the personal consumption expenditures (PCE) price index from the Bureau of Economic Analysis (BEA). PCE covers a wider range of spending, gives housing less weight, and adjusts faster when consumers switch to cheaper goods. CPI has usually run a few tenths of a percentage point above it, but CPI moves markets more because it comes out about two weeks earlier.

Where the Unemployment Rate Comes From

The unemployment rate comes from the Current Population Survey, a monthly survey of about 60,000 households run by the Census Bureau for the BLS. A person counts as unemployed if they have no job, are available to work, and have looked for work in the past four weeks. The rate is the unemployed as a share of the labor force, which includes everyone working or looking. Since 2008 it has ranged from 14.8% in April 2020, during the pandemic lockdowns, to 3.4% in 2023, the lowest since 1969.

The definition misses some people. Someone who stops looking drops out of the labor force, so the rate can fall even while hiring is weak. The BLS also publishes a broader measure, U-6, which adds discouraged workers and part-timers who want full-time hours. The same monthly report includes nonfarm payrolls, a count of jobs from a separate survey of roughly 120,000 businesses and government agencies, and the two surveys can disagree for a month or two.

The BLS puts the threshold for a statistically significant monthly change at about 0.2 percentage point, so a move from 4.1% to 4.2% and back is within normal sampling error. The three- to six-month trend is more useful. The Sahm rule, a widely followed recession signal, is triggered when the three-month average of the rate rises 0.5 percentage point above its low of the prior twelve months.

Release Timing and Our Weekly Posts

Both series are monthly, and each report covers the previous month. FRED dates an observation to the first day of the month it describes, so a CPI reading stamped 2026-08-01 is August data released in September.

Our CPI and jobs analysis comes out every Friday, using the previous Thursday’s U.S. session close and the latest FRED readings for CPIAUCSL, UNRATE, and the effective federal funds rate. Because the data changes only once a month, the same CPI value appears in three to five posts in a row. The jobs figure usually updates a week or two before CPI, so for part of each month the two numbers describe different months. What changes from week to week is the market around them: each post reads the data against that day’s moves in SPY, QQQ, the largest technology stocks, the 10-year yield, the VIX, the dollar, and oil.

When Prices and Jobs Disagree

Most of the time the Fed’s two goals point the same way. High inflation with a tight job market calls for higher rates, and falling inflation with rising unemployment calls for cuts. The difficult cases are when they conflict. In 2022 inflation reached 9.1%, the highest since 1981, with unemployment near 3.5%, and the Fed raised rates at the fastest pace in four decades. The opposite mix, inflation stuck high while unemployment climbs, is the stagflation problem of the 1970s: fighting one makes the other worse.

CPI and Jobs Days in the Market

Prices move on the gap between the release and the forecast. Economists publish estimates before every report and markets price them in ahead of time, often with a rise in the VIX as traders buy protection, so a 0.3% monthly CPI print can lift stocks if 0.4% was expected. On September 13, 2022, August CPI came in hotter than forecast and the S&P 500 fell 4.3%, its worst day since June 2020.

Most of the reaction runs through Treasury yields. A hot inflation or jobs number raises the odds of higher policy rates, the 10-year yield rises, and growth stocks in QQQ usually fall more than SPY. A soft number does the reverse. That is the source of the “good news is bad news” pattern, where a strong jobs report pushes stocks down because rate cuts look less likely. It tends to fade once a recession becomes the bigger worry.

Weekly CPI and Unemployment Analysis Archive

Each date links to the full analysis of that session. The month in parentheses is the period each figure covers.

This page is for educational purposes only and is not financial advice. Please read our Financial Disclaimer.