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 and the CPI have diverged for periods of up to six to twelve months. On average, the Inflation Gauge’s annual rate tends to overestimate changes in the CPI inflation by about 0.09% in any given month.
The Inflation Gauge was unchanged again during June after a flat result in May and a 0.5% increase in April. Compared to a year ago, the index is 2.0% higher, thus reversing the small increase from 2.0% to 2.1% in May.
In conjunction with figures from April and May, the latest figures imply an official CPI reading of 0.4% (seasonally adjusted) for the June quarter. In annual terms, this implies a CPI figure of around 2.1% or 0.2% more than March’s comparable figure.