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The Inflation Project


October 13, 2011

Deflation probability remains stable

Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2011. One measure of this deflation probability was 16 percent on October 5, unchanged from a week earlier. Since increasing 5 percentage points in August, the deflation probability has been fairly stable. An alternative lower bound on the probability of deflation was 1 percent on October 12, also unchanged from a week earlier.

Categories: deflation