Deflation Probabilities

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 2023.

Latest update: 2019–24 Deflation Probability Declines Slightly — July 11, 2019

The 2019–24 deflation probability was 3 percent on July 10, down from 4 percent on July 2. The 2018–23 deflation probability, which had been pinned at 0 percent since February 13, increased to 1 percent on July 5 before moving back down to 0 percent earlier this week, where it remained through July 10. These deflation probabilities, measuring the likelihoods of net declines in the Consumer Price Index over the five-year periods starting in early 2018 and early 2019, are estimated from prices of the five-year Treasury Inflation-Protected Securities (TIPS) issued in April 2018 and April 2019 and the 10-year TIPS issued in July 2013 and July 2014.