Adding another source for gauging inflation trends, the Billion Prices Project from MIT “collects prices from hundreds of online retailers around the world on a daily basis to conduct economic research.” Their indices include “daily prices on the full population of products sold by individual retailers.” The data only goes back to July ’08 so the track record is of course untested so we’ll just use it anecdotally but there is a high correlation with the CPI. As of yesterday, their daily US online price index is up 2.5% y/o/y. This is no question a relatively benign inflation rate but is far from the deflation fears on the part of the Fed and this current level is similar to market inflation expectations of the future. The 10 yr implied inflation rate in the TIPS is at 2.18% and the 5 yr 5yr breakeven is at 2.83%.
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