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: Deflation Probabilities Fall to 0 Percent — February 20, 2019

The 2017–22 and 2018–23 deflation probabilities fell from 5 percent on February 12 to 0 percent on February 13 after the release of the Consumer Price Index (CPI) from the U.S. Bureau of Labor Statistics and the incorporation of revised seasonal adjustment factors for the CPI. The deflation probabilities both remained at 0 percent through February 15. 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.