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.

Deflation Probabilities Currently 0 Percent—February 15, 2018

The 2017–22 deflation probability has been 0 percent since December 18. The 2016–21 deflation probability declined from 0.5 percent on February 7 to 0.0 percent on February 14. These deflation probabilities, measuring the likelihoods of net declines in the consumer price index over the five-year periods starting in early 2016 and early 2017, are estimated from prices of the five-year Treasury Inflation-Protected Securities (TIPS) issued in April 2016 and April 2017 and the 10-year TIPS issued in July 2011 and July 2012.