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 2022.

Latest update: Deflation Probabilities Increase Slightly — May 24, 2018

Both the 2017–22 deflation probability and the 2018–23 deflation probability increased from 3 percent on May 16 to 4 percent on May 23. These deflation probabilities, measuring the likelihoods of net declines in the consumer price index over the five-year periods starting in early 2017 and early 2018, are estimated from prices of the five-year Treasury Inflation-Protected Securities (TIPS) issued in April 2017 and April 2018 and the 10-year TIPS issued in July 2012 and July 2013.