No Inflationary Pressures Based on the BPP@MIT Index and Two Measures of Expected Inflation
The Billion Prices Project @ MIT just released daily online price index data through June 30, and the annual inflation rates from that price index are displayed in the chart above going back to late 2009 (red line in chart). According to this real-time measure of major inflation trends in the U.S., inflationary pressures have been subsiding for the last year, and annual inflation has fallen from almost 4% last July to the current level of about 1.25%, the lowest rate since late 2009. In contrast to the MIT-BPP inflation, annual inflation based on the CPI is running higher, at about 1.75% through June (blue line in chart).
In one of several other related releases this week, the Federal Reserve Bank of Cleveland reported that its latest estimate of expected inflation over the next ten years was 1.26% in June, the lowest level in the 30-year history of the Cleveland Fed's series going back to 1982, except for a slightly lower estimate in May.
Further, Bloomberg is reporting that 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 for the last three months. The current breakeven rate is about 2.1%, indicating that the bond market expects future inflation to continue to remain low.
Taken together, these three measures above of actual and expected inflation suggest that there's very little empirical evidence of any inflationary pressures in the U.S. economy, and there's probably more evidence now of deflationary pressures.