‘Hope for the best, prepare for the worst’ ahead of the October CPI

CNBC’s Jim Cramer on Tuesday presented investors with his forecast for the October CPI report.

“Maybe this time will be different, and it could be…but right now when it comes to the CPI, I think we’re hoping for the best, preparing for the worst situation,” he said.

The Consumer Price Index measures the prices consumers pay for a variety of goods and services. Investors will watch for any signs of declining inflation in the report, which is due out Thursday morning.

The October CPI reading could give clues as to whether the Federal Reserve will adjust the pace of interest rate hikes next month. The report also has implications for the stock market, which is already volatile this week due to Tuesday’s midterm elections.

“We’re all worried about the CPI — every time this headline inflation number comes in too high, interest rates go up and stocks go down,” Kramer said, adding that many of the inputs for the report including food and energy are already very high.

But what Kramer is most concerned about is that current CPI estimates do not appear to take into account the multiple price increases that companies have implemented.

“What I don’t understand is how the consensus doesn’t seem to take these high prices into account. The numbers always seem to come in so low, like the people who put expectations together have never gone to the supermarket,” he said.