Deflation Probability Measures Remain Steady

Prices of Treasury Inflation-Protected Securities (TIPS) with similar maturity dates can be used to measure probabilities of a net decline in the consumer price index over the five-year period starting in early 2011 or the five-year period starting in early 2012. One measure of the probability of deflation for the 2012-17 period was 6 percent on January 2, down slightly from 7 percent on December 26. The 2011-16 deflation probability was 8 percent on January 2, the same as a week earlier.

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