The Melbourne Institute’s Inflation Gauge is an attempt to replicate the ABS consumer price index (CPI) on a monthly basis instead of quarterly. It has turned out to be a reliable leading indicator of the CPI, although there are periods in which the Inflation Gauge series and the CPI have diverged, only for the two series to eventually converge over the space of six to twelve months. Generally, the Inflation Gauge’s annual rate tends to overestimate changes in the CPI inflation by about 0.08%.
During March, the Inflation Gauge reversed February’s 0.1% fall and increased by 0.1%, leaving the annual rate at 2.1%. In conjunction with figures from January and February, the latest figures imply an official CPI reading near 0.20% (seasonally adjusted) for the March quarter. In annual terms, this implies a CPI figure of around 1.7%, or 0.2% less than December’s comparable figure.
