The Billion Prices Project @ MIT just released daily online price index data through May 31, and the annual inflation rates from that price index are displayed in the chart above going back to late 2009 (red line). According to this real-time information of major inflation trends in the U.S., inflationary pressures have been subsiding for the last year, and the current annualized inflation rate of about 1.5% through May is the lowest rate since late 2009. In contrast to the MIT-BPP inflation, annual inflation based on the CPI is running higher, at about 2.25% through May.
The breakeven rate on regular 10-year Treasury notes versus 10-year indexed-Treasuries, a market-based measure of expected future inflation, has been trending downward from a recent peak of 2.43% in April, and is currently at 2.07%, indicating that the bond market expects future inflation to continue to remain low. The one-year breakeven rate just turned negative, so that might indicate some expectation of mild deflation over the next year.
Bottom Line: There doesn't seem to be any evidence that inflationary pressures are developing in the U.S. economy, and there doesn't seem to be any indication that inflation will be a problem going forward through the rest of the year. If anything, we might see some mild deflation.
Update: Note in the chart below that when both the BPP@MIT are scaled to equal 100 in July of 2008, they both are equal 105 at the end of May 2012, both having risen exactly 5% over the last four years (almost). Therefore, the BPP@MIT index tracks the CPI over long periods of time, despite the fact they are tracking different baskets of goods with different weights. In that case, it would be hard to make the case that the BPP@MIT index "inherently deflationary" (see comments).
Bottom Line: There doesn't seem to be any evidence that inflationary pressures are developing in the U.S. economy, and there doesn't seem to be any indication that inflation will be a problem going forward through the rest of the year. If anything, we might see some mild deflation.
Update: Note in the chart below that when both the BPP@MIT are scaled to equal 100 in July of 2008, they both are equal 105 at the end of May 2012, both having risen exactly 5% over the last four years (almost). Therefore, the BPP@MIT index tracks the CPI over long periods of time, despite the fact they are tracking different baskets of goods with different weights. In that case, it would be hard to make the case that the BPP@MIT index "inherently deflationary" (see comments).
0 comments:
Post a Comment