Inflation Rate of Change

Inflation and the Fed interest rate impacts all corners of the economy. Today I am releasing to the community an indicator that measures the rate of change of inflation with historical data back to ~1950. I built this to study the historical market impacts of inflation and changes to the Fed rate (see separate indicator I published for Fed Funds Rate here).

What this indicator does:
This indicator pulls in Consumer Price Index data and applies a rate of change formula to it. The output is measured as a percentage. I.e. 7 would mean a 7% rate of change over the look-back period.

Options in the indicator:
You can change the amount of bars back it uses to calculate rate of change. By default it is set to 253, which would be looking 1 year back on a normal stock market day chart. If you are on a month chart, you would input 12 there to look 1 year back, etc.

There are also different versions of the CPI that you can select with a drop-down input to pull in different inflation measures:

• FRED:CPIAUCSL = Urban Consumers, All Items (this is the default data it pulls, and is a common way to measure inflation)
  
• FRED:CPIUFDNS = Food
  
• FRED:CPIHOSNS = Housing
  
• FRED:CPIENGSL = Energy
  

Disclaimer: Open-source scripts I publish in the community are largely meant to spark ideas that can be used as building blocks for part of a more robust trade management strategy. If you would like to implement a version of any script, I would recommend making significant additions/modifications to the strategy & risk management functions. If you don’t know how to program in Pine, then hire a Pine-coder. We can help!

Release Notes:

Update: Added additional CPI / inflation measures that can be selected from a drop-down menu. Now includes: All Items, Food, Housing, Energy, Medical and Apparel.