What to know about CPI following February inflation print

Yahoo Finance Live details what consumer price index data means for Americans and where U.S. consumers are seeing inflation hit their budgets the hardest.

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SEANA SMITH: Let's get you guys up to speed with everything you need to know at 3:00 PM Eastern time. Headline inflation coming in as expected, but the Fed's preferred gauge lands hotter than forecasted, potentially complicating tightening plans. But what does this number actually mean, and how exactly does it measure inflation? We've got you covered with an in-depth look at the CPI print.

DAVE BRIGGS: Plus, stocks jump as financials rebound after the collapse of Silicon Valley Bank, attention turning to the role of lawmakers in preventing more contagion. Maxine Waters weighs in on Yahoo Finance Live. We got that interview in just a bit.

SEANA SMITH: And "Shark Tank" star Kevin O'Leary giving us his take on the Silicon Valley Bank collapse. He will tell us why he thinks management should take the largest blame in this scenario here.

DAVE BRIGGS: But first, a fresh read on inflation today in the form of CPI. The headline number coming in as expected, up 0.4% month over month, and February, 6% year over year. Inflation, yeah, it remains hot, but let's take a step back. What does CPI actually mean? How does it measure inflation?

CPI as defined by the US Bureau of Labor Statistics is the measurement of monthly change in prices paid by US consumers. Now, the index tracks up to 100,000 goods and services a month. We're talking categories like housing, food, transportation, and apparel. The Bureau of Labor Statistics, commonly known as BLS, gives each category a relative importance based on a survey of what consumers buy.

SEANA SMITH: All right, well, 450 workers at the BLS, they're responsible for tracking all of the prices, and they oversee 8,000 households. Now to make sure that products haven't changed in price too much, they do compare a product, let's say eggs, for example, to a list of data points from the month prior. That means that these BLS workers, they are tracking the price of eggs from past months based on things like its size, its brand, and also labeling.

DAVE BRIGGS: But the index does not include everything. The Fed prefers another measure called PCE. The index is a measure of the prices that people living in the United States or those buying on their behalf pay for goods and services. The Bureau of Labor Stats produces the CPI while the Bureau of Economic Analysis produces PCE. CPI transitions items in and out of basket every two years, where PCE changes every month based on consumer trends. The Fed takes both into account when making decisions, which gives the Fed a general picture of where inflation is heading.