US inflation is tracked mainly through the consumer price index and the personal consumption expenditures index. The Federal Reserve targets two per cent on core PCE, which strips out food and energy because those swing for reasons monetary policy cannot influence.
It is the central variable for markets because it dictates policy. Persistent inflation forces higher rates, higher rates lower the present value of future cash flows, and the entire risk asset complex reprices as a result.
Expectations are partly self-fulfilling. If firms expect prices to rise they raise prices, and if workers expect it they bargain accordingly, which is why central bankers care so much about surveys and about breakeven rates that appear to have no immediate market consequence.