hi there traders in this short video we will have a look at one of the most important inflation indicator which is CPI CPI stands for Consumer Price Index besides other economic indicators such as GDP trade balance retail sales or manufacturing production which are all growth indicators of an economy CPI and other inflation indicators are used to Gorge the level of price stability within an economy the inflation indicators are extremely important to monitor as they are also on a radar of most central banks as it serves them to determine their inflation target interest rate and further
monetary policy there are more types of inflation indicators such as CPI which is Consumer Price Index PPI which stands for produces price index CRB index for futures or PCE which is personal consumption expenditures price index CPI however is the most watched and most relevant inflation indicator among all of these that's why it's also marked as a red event on forex factory calendar as it is often a very significant market mover a consumer price index is a measure of the average price of consumer goods and services purchased by households within an economy it measures the average
change in price paid for a constant basket of goods and services from one period to the next CPI is compiled from a sample of prices for food housing fill clothing transportation and medical services the percentage change in a CPI reading measures the price growth and changes in the cost of living rapid increase in the CPI a value indicates inflation whereas the rapid decrease can suggest a deflation in case of deflation the prices of goods and services decline and it indicated that there is no growth within an economic for some countries the core CPI figure is
more important than the headline CPI core CPI excludes certain components which are most volatile or seasonally sensitive for price development for example in the United States core CPI excludes food and energy while in Australia the core CPI reads a strength mean CPI as it includes all 30% of most volatile items from the market moving perspective the CPI release tends to create most volatility in the currencies of countries which release their CPF figures on a quarterly basis such as Australia or New Zealand most economies however release their CPI every month this includes Canada USA or a
United Kingdom in case of eurozone the inflation is derived from the readings of individual countries and in the form of final CPI which is compared with the previous year's figures the eurozone release tends to have a relatively mild impact in the financial markets as the CPI flex estimate and German prelim CPI figures are released about 15 days earlier in cases of most major economies sudden or unproductive changes of the CPI figures lead to sharp increases in currency market volatility as traders and investors react in anticipation of move by central bank to keep inflation under control
an interesting sight to check the current inflation rates of many economies is trading economics where you can compare a list of countries and their current economic situation on this side you can just click on the inflation rate and the countries will be sorted from the highest rate to the lowest this nice comparison can tell you about prices balances and countries where they experience deflation or hyperinflation let's switch back to forests factory and in the last note please bear in mind that any significant deviation in I'm trading compared to the expected figures and also compared to
the previous print including correction can have a significant market moving potential there is an increased volatility and a low liquidity in the markets on the targeted currencies during this scale to releases it is therefore highly advisable to be very cautious while training and to have a proper plan and a maximum control of your positions that's about it for now thanks for your attention and remember to try it safe Cheers [Music]
