Deflation or Inflation?

August 19, 2009 11:45am by Barry Ritholtz

The one question I seem to get more than any is on (Hyper) Inflation versus Deflation. As previously noted, we clearly are in a Deflationary party of the cycle now.

While inflation may occur ion the future, and the possibility exists for Hyper-Inflation, these are merely potential issues down the road.

As these two charts show, we now have Deflation, are likely to see it continue for some time into the future:

Near Record Deflation Rates At All Levels

click for larger charts

US capacity utilization leads core inflation by about a year

Chart source: Albert Edwards, Society General

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