Consumer Price Index is the main indicator of inflation in the country. In other words, inflation reflects a decline in purchasing power of the yen, so for every yen you can buy fewer goods and services. In terms of measuring inflation, CPI is the most obvious way to quantify changes in purchasing power.
The report tracks changes in the price of a basket of goods and services. An increase in the index indicates that it takes more yen to purchase this same set of basic consumer items.
The indicator is taken into account by the market.