The Melbourne Institute (MI) is known for bringing a consumer price index that is done every month to bring the most accurate and timely results. The formal CPI statistics are normally made available on quarterly basics. However, MI tries to bring this data on the monthly basis. The data is collected by monitoring the prices of over top 1000 goods and services. This data is then further polished to bring the inflation statistics for each month.
This monthly data can help the forex traders to monitor day to day changes in the market. Hence, a trader can make corrective decisions based on these updated results. The real reason for making inflation gauge was to support the CPI index rather than contradicting it. However, the difference between these two mechanisms is that in a quarter, CPI estimates the price data of over 100,000 goods and services. On the other hand, the inflation gauge can only measure the prices of around 1,000 goods and services. Along with that, the CPI only collects the data from the original payments, whereas the inflation gauge collects the data as observed on the internet. The source of information for the CPI is the financial institutions, and inflation gauge collects from the published information. Additionally, while collecting the data the CPI looks for to cover a more area than the inflation gauge. In this regard, it can be said that inflation gauge is just a supplement of CPI and should not be taken as a replacement tool.
For the traders, the inflation gauge should be taken as a smaller or limited version of CPI. However, be careful and not to use it as a replacement tool of CPI. Although the inflation gauge does its job perfectly in monitoring inflation charts, still there are few things that must be highlighted. We have in addition to mention that in conducting an examination of inflation, we should take into deliberation if the basis of inflation is completely occurring from the monetary dynamics of demand and supply and not from administration interference such as the manufacture of new money, fiscal policies and monetary, taxation, and other superseding factors such as customer confidence, etc.
The best way to utilize the inflation gauge is to use it with the CPI index, plus data charts of balance of payment and trade, consumer confidence and investment preferences surveys, and also the government policies. Making forecasts for the forex trading can be done with ease if we know how to use economic data in both global and national context.