CPI Forecast
With both the PPI and the CPI being released this week, the Graph of the Week shows the annual CPI forecast, i npercent, from the November 2009 NABE Outlook. From the survey:
Inflation will remain low, mostly because substantial labor market slack and further productivity gains will reduce labor costs. Compensation (in the nonfarm sector) is expected to climb just 2.3 percent next year while labor productivity advances 2.8 percent. That means unit labor costs will decline in 2010, on top of an already large decline in 2009. Together, the two-year period is expected to show the sharpest decline in unit labor costs on record. The NABE panel expects the core PCE deflator (consumer prices excluding food and energy, the preferred inflation measure of the Federal Reserve) to rise just 1.5 percent in 2010, following an identical gain in 2009.
NABE member can read the full NABE Outlook here. For the public, a summary is online.
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