Jim Cramer explains why the December CPI number is a ‘big deal’

CNBC’s Jim Cramer on Wednesday broke down the significance of the December CPI report for investors.

“What makes tomorrow’s CPI number such a big deal? Simple: We’re looking to see if we’re nearing the end of a period when companies can raise prices with impunity,” he said.

Kramer said that earlier The Fed needs to crush corporate pricing power in order to beat inflation.

The consumer price index report for December is He is scheduled to be released on Thursday. The indicator shows how the prices of goods and services have changed in a given month. Economists polled by Dow Jones expect the December CPI report to show that prices fell 0.1% from the previous month.

Stocks rose on Wednesday as investors grew more confident that the Federal Reserve’s interest rate hike is succeeding in curbing inflation.

Cramer said that despite the newfound optimism on Wall Street, the December CPI number is likely to spell bad news for the economy — and for companies that are due to report quarterly results in the coming weeks.

“Unless inflation drops in all the right places, this earnings season could be very difficult,” he said.