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 — December 6, 2018

The 2018–23 deflation probability was 7 percent on December 4, up from 6 percent on November 28. The 2017–22 deflation probability was 6 percent on December 4, up from 5 percent on November 28. 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.