Over the first five months of the year, the CPI is tracking almost 2 percentage points below its 1996 average. However, other measures of retail price movements have been substantially higher.
Survey data show the same basic patterns.
What's more, households see inflation holding steady at this rate over the next five to 10 years. On the other hand, reports from purchasing managers continue to reveal little upward pressure on industrial prices. The National Association of Purchasing Management's price index has been hovering around the 50 mark for most of the past year, indicating that roughly the same percentage of buyers are reporting higher prices as lower ones. This year's CPI performance has come as a bit of a surprise to inflation forecasters, including the Federal Reserve. A key question facing the FOMC is whether this year's unexpectedly low CPI increase is the beginning of a new, lower inflation trend , or merely a transitory dip in the data that will ultimately turn upward again.