Using estimates derived from Treasury Inflation-Protected Securities (TIPS) markets, described in a technical appendix, this weekly report provides two measures of the probability of consumer price index (CPI) deflation through 2017.
One measure of the probability of deflation for the 2012–17 period is 0 percent, where it has been most days since early February this year. The 2013–18 deflation probability, based on the 5-year TIPS issued last month and the 10-year TIPS issued in July 2008, is also 0 percent.
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 2013 or the five-year period starting in early 2012.
Click and drag your cursor over a date range to zoom in. A double-click on the chart will reset the zoom.
Note: The 2013 to 2018 probability and lower bound are not pictured. They have been 0 percent since their April 18 inception.
Source: Federal Reserve Bank of Atlanta