Understanding the Basics of Rate of Inflation 

Rate of inflation refers to the percentage change in the general price level of goods and services in an economy over a specific period, usually a year. It is a key economic indicator that measures the rate at which prices are increasing, and it affects consumers, businesses, and the overall economy. A higher rate of inflation means that the same amount of money buys fewer goods and services, reducing purchasing power and potentially leading to economic instability.

Different Types of Inflation 

There are several types of inflation, and understanding each type is important to determine the appropriate course of action. 

One of the types of inflation is cost-push inflation, which occurs when the cost of production rises, leading to higher prices for consumers.  

Another type is demand-pull inflation, which occurs when the demand for goods and services exceeds the supply, resulting in higher prices.  

Deflation occurs when the rate of inflation goes negative, leading to a decrease in prices. 

Disinflation refers to the decrease in the rate of inflation over time.  

Reflation is the opposite of deflation, and it occurs when there is an increase in the rate of inflation after a period of deflation.  

Creeping inflation refers to a slow increase in the rate of inflation, while walking inflation refers to a moderate increase in inflation.  

Running inflation refers to a sudden and rapid increase in the rate of inflation.  

Finally, hyperinflation occurs when the rate of inflation becomes extremely high, leading to a loss of value of the country’s currency. 

The Effects of Rate of Inflation on the Economy 

The rate of inflation has a significant impact on the economy. When inflation is high, the cost of goods and services increases, which reduces purchasing power. This, in turn, leads to a reduction in demand for goods and services, leading to a decrease in production and eventually leading to unemployment. The increase in prices of goods and services also results in a decrease in the value of money. 

Inflation can also lead to higher interest rates, as central banks try to control the rate of inflation. This, in turn, leads to an increase in the cost of borrowing, making it more difficult for businesses to obtain loans to finance their operations. Additionally, inflation can also lead to an increase in the cost of living, leading to a decrease in the standard of living. 

Measuring Rate of Inflation 

The rate of inflation is typically measured by calculating the percentage change in the price level of a basket of goods and services over a period of time. There are different ways to measure the rate of inflation, but the most common methods are the Consumer Price Index (CPI) and the Producer Price Index (PPI).

The CPI measures the average price change of a basket of goods and services typically consumed by households. The goods and services included in the CPI are weighted according to their relative importance in the average household’s expenditure. The CPI is usually calculated on a monthly basis and is used to measure changes in the cost of living over time.

The PPI, on the other hand, measures the average price change of goods and services at the producer level before they reach the consumer. The PPI includes goods and services used in the production process, as well as intermediate goods and services. The PPI is often used as a leading indicator of future changes in the CPI.

To calculate the rate of inflation, you would compare the CPI or PPI from one period to another, usually a month or a year, and calculate the percentage change. For example, if the CPI was 100 in January and 105 in February, the rate of inflation would be (105-100)/100 = 5%.

Protecting Against the Rate of Inflation 

There are different ways of protecting against the rate of inflation. One way is to invest in assets that increase in value with inflation, such as real estate, stocks, and commodities. Another way is to invest in bonds, which can provide a steady stream of income and help offset the effects of inflation. 

Additionally, it is important to diversify investments across different asset classes to spread the risk. Another way to protect against inflation is to save in high-yield savings accounts or certificates of deposit (CDs) that offer interest rates that keep up with inflation. 

What is the Purchasing Managers’ Index (PMI) 

The Purchasing Managers’ Index (PMI) is an economic indicator that measures the health of a country’s manufacturing sector. It is based on a survey of purchasing managers in the manufacturing industry and provides valuable insight into the state of the economy. The PMI is considered a leading indicator, as it can signal changes in economic activity before they become apparent in official economic data. 

How the Purchasing Managers’ Index Works 

The PMI is based on a survey of purchasing managers in the manufacturing industry. The survey asks purchasing managers to rate various aspects of their business, such as new orders, production levels, employment, and prices. The answers are then compiled into a single index number that represents the health of the manufacturing sector. 

The PMI is calculated on a scale of 0 to 100, with a score above 50 indicating expansion in the manufacturing sector, and a score below 50 indicating contraction. The PMI is broken down into sub-indices for new orders, production, employment, supplier deliveries, and inventories. 

How the PMI Affects Economic Decisions 

The PMI is closely watched by economists, investors, and policymakers, as it provides valuable information on the state of the economy. A high PMI reading suggests that the manufacturing sector is expanding, which can lead to increased employment, higher wages, and a stronger economy. A low PMI reading, on the other hand, suggests that the manufacturing sector is contracting, which can lead to job losses, lower wages, and a weaker economy. 

Policymakers use the PMI to guide economic policy decisions. For example, if the PMI indicates that the economy is weakening, policymakers may consider lowering interest rates or implementing fiscal stimulus to stimulate economic growth. 

Why is PMI important

The PMI is an important economic indicator because it provides real-time information on the health of the manufacturing sector. The manufacturing sector is a critical component of most economies, as it provides jobs and drives economic growth.

A strong PMI reading suggests that the manufacturing sector is expanding, which can have positive spillover effects on other sectors of the economy. A weak PMI reading, on the other hand, suggests that the manufacturing sector is contracting, which can lead to job losses and lower economic growth. 

The PMI is also important for investors, as it provides information on the performance of individual companies and sectors. For example, a high PMI reading for the technology sector may signal that technology stocks are likely to perform well in the coming months. 

When is PMI released

The PMI is released on a monthly basis by a number of different organizations, including Markit and the Institute for Supply Management (ISM).

The PMI is typically released on the first business day of the month and covers the previous month. For example, the PMI for January would be released on the first business day of February. Investors and economists closely watch the PMI release date, as it can have a significant impact on financial markets. 

What Is the Industrial Production Index (IPI)? 

The Industrial Production Index (IPI) is an economic indicator that measures the production output of the industrial sector of a country. It includes the manufacturing, mining, and electric and gas utilities sectors. The IPI provides insight into the health of the economy and is used by policymakers, investors, and analysts to make informed decisions. The IPI is an important tool for predicting future economic growth or contraction. 

How Does the Industrial Production Index (IPI) Work? 

The IPI is calculated by the Federal Reserve Board in the United States and other central banks around the world. It is based on a survey of businesses and covers approximately 100 products across various industries. The survey tracks the quantity of goods produced, as well as the changes in production levels over time. The IPI is reported monthly and is seasonally adjusted to account for variations in production levels throughout the year. 

How to Calculate the IPI 

The IPI is calculated using a base year that is set at 100. The current production levels are compared to the base year, and the percentage change is reported as the IPI for that month. For example, if the production levels in the current month are 10% higher than the base year, the IPI for that month would be 110. This allows for easy comparison of production levels over time, as well as between different industries. 

Benefits of the Industrial Production Index (IPI) 

The IPI provides valuable information for businesses, investors, and policymakers. Businesses can use the IPI to monitor production levels in their industry and adjust their operations accordingly. Investors can use the IPI to make informed decisions about which companies to invest in based on their production levels. Policymakers can use the IPI to make decisions about monetary policy and to anticipate changes in economic growth. 

The IPI can also be used in conjunction with other economic indicators, such as the Gross Domestic Product (GDP), to provide a more comprehensive picture of the economy. The IPI is particularly useful for predicting changes in GDP, as it provides an early indication of changes in production levels. 

When is Industrial Production released? 

The Federal Reserve Board releases the IPI monthly, typically around the middle of the month. The data is available on the Federal Reserve website and is widely reported in the media. Investors and analysts typically pay close attention to the IPI release, as it can have a significant impact on the stock market and other financial markets. 

This week, market participants are eagerly awaiting some highly anticipated economic reports. The focus will be on key indicators such as CPI in Canada, the UK, and New Zealand, as well as Flash Manufacturing and Services PMI in the UK and the US. These much-awaited reports are crucial in helping traders and investors stay ahead of the curve and make informed decisions.

Here are the key events to watch out for:

New York Empire State Manufacturing Index | US (April 17)

The NY Empire State Manufacturing Index sank to -24.6 in March 2023 from February’s -5.8.

 Analysts anticipate a reading of -15 in April.

Claimant Count Change | UK (April 18)       

The number of people claiming for unemployment benefits in the UK fell by 11,200 in February 2023.

For March, analysts expect this trend to persist, with a projected decrease of 9,500.  

Consumer Price Index | Canada (April 18)

CPI in Canada rose 0.4% in February 2023, easing from 0.5% in January.

For March, analysts expect the index to increase by 0.3%. 

Consumer Price Index | UK (April 19)

UK inflation rose unexpectedly in February, with CPI up 10.4% annually from 10.1% in January. This was the first increase in four months. 

For March, analysts expect a lower reading of 10.2%.

Consumer Price Index | New Zealand (April 20)

New Zealand’s CPI jumped 1.4% in the fourth quarter of 2022 from the previous quarter.

For the first quarter of 2023, analysts forecast the index to increase by 1.6%.

Flash Manufacturing PMI and Flash Services PMI | Germany (April 21)      

In March 2023, the German Flash Manufacturing PMI was revised slightly higher to 44.7, while the Flash Services PMI was revised slightly lower to 53.7. 

For April, analysts expect the Flash Manufacturing PMI to be released at 45.5, while Flash Services PMI at 53.5.

Flash Manufacturing PMI | UK (April 21)

UK Flash Manufacturing PMI came in at 47.9 in March 2023, down from February’s seven-month high of 49.3.

Analysts expect a reading of 48.5. in April. 

Flash Manufacturing PMI and Flash Services PMI | US (April 21)  

The US Flash Manufacturing PMI came in at 49.2 in March 2023, up from 47.3 in February. Meanwhile, Services PMI was revised lower to 52.6.

For April 2023, analysts expect the US Flash Manufacturing PMI to be released at 48, while Flash Services PMI at 51.8.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

As we begin a new week, the financial world is buzzing with anticipation of some economic reports. All eyes will be on the Bank of Canada Rate Statement and FOMC Meeting Minutes, alongside the eagerly awaited CPI, PPI and Retail Sales data release in the US. These reports are crucial for traders navigating the markets and making informed decisions. 

Here are key events to watch out for:

Consumer Price Index (CPI) | US (April 12)

The CPI in the US rose 0.4% month-on-month in February 2023, after rising 0.5% in January.

For March, analysts expect the reading to increase by 0.3%

Bank of Canada Rate Statement | (April 12) 

As previously signalled, the Bank of Canada kept its overnight rate target steady at 4.5% during its March 2023 meeting.

The central bank stated that it intends to maintain the current rate if the economic conditions align with the latest Monetary Policy Report’s expectations. 

FOMC Meeting Minutes | US (April 13)

The Fed raised the fed funds rate by 25bps to 4.75%-5% in March 2023, matching the February increase, and pushing borrowing costs to new highs since 2007, as inflation remains elevated.

The decision came in line with expectations from most investors, although some believed the central bank should pause the tightening cycle to shore up financial stability.

Employment Change | Australia (April 13)

Employment in Australia created an additional 64,600 jobs to reach 13.83 million in February 2023, surpassing market predictions of 48,500, following a downward revision of 10,900 jobs in the previous month.

Analysts expect employment will add 20,000 jobs in March 2023.

Gross Domestic Product (GDP) | UK (April 13)

The British economy expanded 0.3% month-on-month in January 2023, partially bouncing back from a 0.5% contraction in December when strikes halted business activities.

For February 2023, analysts expect the UK GDP to expand further by 0.2%.

Producer Price Index (PPI) | US (April 13)

Producer prices for final demand in the US fell 0.1% month-on-month in February 2023.

For March, analysts expect the US PPI to go up by 0.1%. 

Retail Sales | US (April 14)

Retail sales in the US were down 0.4% month-on-month in February 2023, following an upwardly revised 3.2% surge in January.

For March 2023, analysts expect US Retail Sales to contract by 0.4%.

Prelim University of Michigan Consumer Sentiment (April 14)

The University of Michigan revised the US consumer sentiment downwards to 62 in March 2023 from the preliminary figure of 67. This marks the first decrease in sentiment in four months, as consumers anticipate an upcoming recession.

For April 2023, analysts the data to stand at 62.7.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

Sydney, Australia, April 3, 2023 – VT Markets, a global multi-asset broker, has announced its partnership with TradingView, the world’s leading provider of charting and analytical tools with over 50 million users.

The combination of VT Markets’ expertise in the financial industry along with TradingView’s cutting-edge technological tools ensures that traders have access to the best resources available when making crucial trading decisions. Through this partnership, VT Markets’ clients will be able to benefit from TradingView’s comprehensive market research data and advanced financial visualisation tools. Additionally, TradingView provides a multitude of expert tools for traders, such as multiple chart types, customisable technical indicators, drawing tools, and live market updates.

A wide range of assets, such as Forex, Stocks and CFDs, now can be seamlessly traded on TradingView charts without leaving the VT Markets platform. This integration will allow users to conduct top technical analysis for better investment strategies and enjoy an enhanced trading experience.

A representative of VT Markets said, “We’re delighted to be partnering with TradingView. As a technology-driven broker, we’re always looking for ways to simplify our clients’ trading experience while maximising their trading results. This collaboration further strengthens our commitment towards providing them with access to innovative technologies and premium services that enable them to stay ahead of the market”.

About the Company:

VT Markets is a regulated multi-asset broker with a presence in over 160 countries. The broker has won many international accolades including Best Customer Service and Fastest Growing Broker. Their mission is to make trading an easy, accessible, and seamless experience for everyone. 

For more information, please contact media@vtmarkets.com.

Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume ”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com

As the first quarter of 2023 draws to a close, many countries are gearing up to release some major economic data. The US is scheduled to publish its Consumer Confidence (CPI) and Core PCE Price Index reports, while Australia and Germany will be releasing their CPI data. With investors and traders globally eagerly waiting for these reports, you can expect some serious market movements. 

Here are key events to watch out for:

CB Consumer Confidence | US (March 28)

The US CB Consumer Confidence fell to 102.9 in February 2023.

Analysts anticipate it to drop further to 101 in March 2023.

Consumer Price Index (CPI) | Australia (March 29)

Australia’s monthly CPI rose 7.4% in January 2023, but still lower than the 8.4%  rise for the year to December 2022, signifying stubborn high inflation. 

For February 2023, analysts expect it to increase by 7.6%.

Prelim Consumer Price Index (CPI) | Germany (March 30) 

The CPI in Germany increased 0.8% in February 2023, easing from a 1% rise in the previous month.

For March 2023, analysts expect the index to increase by 1.5%.

Gross Domestic Product (GDP)  | Canada (March 31) 

Canada’s GDP shrank by 0.1% in December 2022, following a 0.1% increase in November 2022. Analysts expect the Canadian economy to increase by 0.3% in January 2023.

Core PCE Price Index | US (March 31)

Core PCE prices in the US, which exclude food and energy, jumped by 0.6% month-on-month in January 2023, the most since August, following an upwardly revised 0.4% increase in the previous month.

For February, analysts expect the index to increase by 0.6%.