The Atlanta Fed’s Business Inflation Expectations (BIE) slipped another notch to 1.9% in February from 2.0% in January. The readings is not significantly different from much of the past year, but it is the lowest since 1.8% in October 2017. The drop in expected inflation is probably related — at least in part — to recent declines in energy prices that have helped mask the upward movement in other commodities, although these have moderated as well.
The BIE does not point to business inflation expectations becoming unanchored and is not materially off the Fed’s 2% symmetric inflation objective. In comparison with the University of Michigan’s inflation expectations, consumers are still looking for modest upward pressures in spite of cheaper gasoline prices.
The available data on inflation as of today are well aligned with the BIE, although it is possible that may change when the delayed PCE deflator is finally published.
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