Most of the countries whose currencies are traded in the forex markets often release economic reports generally referred to as Consumer Price Index (CPI). The CPI reckons with the average price level paid by the common consumer for basic goods and services, comprising a variety of items ranging from food to medicine to house prices. After assessing changes in prices for these items, the report estimates how much inflation is taking place in the economy. Rising inflation means there are less free money for retail sales and even lesser money for economic growth. In recent times the large spike in oil prices has affected CPI. It quite simply means that there is less disposable income with the working class and everything from transportation to food to retail sales is affected. So as a Forex trader, CPI will give you critical information about a nation that could directly affect the nation’s currency in the Forex market.
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