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 as long as twelve months. On average, the Inflation Gauge’s annual rate tends to overestimate changes in CPI inflation by an average of about 0.10% in any given quarter.
The Inflation Gauge increased by 0.10% during October after a 0.30% increase in September and a 0.10% increase in August. On an annual basis, the index increased by 1.9%, the first time since December 2016 the index’s annual rate has fallen below 2.0%.
Bond yields finished the day higher. Yields on 3-year ACGBs were 3bps higher at 2.15%, 10-year yields had increased by 4bps to 2.75% and 20-year ACGBs gained 6bps to 3.11%. The Aussie dollar was broadly unchanged at 71.90 US cents.