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 0.09%.
The Inflation Gauge jumped by 0.5% during April, a large increase on March’s +0.1% increase and February’s 0.1% fall. Compared to a year ago, the index is 2.0% higher. This represents a slip in the annual rate from March’s comparable figure of 2.1%. (April 2017 also had a 0.5% increase for the month.)
