Via Economic Greenfield:
While I do not agree with the current readings of the measure – I
think the measure dramatically understates the probability of deflation,
as measured by the CPI – the Federal Reserve Bank of Atlanta maintains
an interesting data series titled “Deflation Probabilities.”
As stated on the site:
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 2017.
A chart shows the trends of the two probabilities. As one can see in the chart, the readings are volatile.
As for the current weekly reading, the May 9 update states the following:
One measure of the probability of deflation for the 2012–17 period is 0
percent, where it has been most days since early February this year. The
2013–18 deflation probability, based on the 5-year TIPS issued last
month and the 10-year TIPS issued in July 2008, is also 0 percent....MORE
For more on the Atlanta Fed's Inflation Project see last year's "
Atlanta Fed: 'Deflation Probabilities on Our Radar Screen'":
Or 2010's "
Atlanta Fed: 'How close to deflation are we? Perhaps just a little closer than you thought'".
