Inflation Indicators - Lesson 2
In our previous lesson, we presented various indicators regarding growth. In the current lesson, will discuss some rates measuring the rise of prices, inflation.
The most well-known measure for the rise of consumers prices is the CPI rate. It’s a measure of the average change over time in the prices paid by consumers for a basket of consumer goods and services. The annual rate of change in the CPI is usually referred to as “the inflation rate”. The rate is measured on a month on month basis, on a quarter on quarter and on a year on year basis. We have already discussed the importance of inflation in a previous lesson and the implication it has for monetary policy. Hence, an acceleration of the rate beyond market expectations tends to provide support for a currency while a deceleration beyond market expectations, or even a contraction of prices, tends to weaken it.
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