Forex Dictionary

CPI Flash Estimate

CPI Flash Estimate

The Consumer Price Index (CPI) Flash Estimate measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. The Flash Estimate is releases about two weeks ahead of the complete CPI report and is derived from current energy prices and early inflation data from EU member states. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.