The Word 'Disinflation' Is Booming




As oil prices have cratered over the last several months, they've taken inflation down, too. 

But the decline in prices isn't being talked about a outright deflation - or falling prices - but disinflation, meaning slowing inflation. 

On Wednesday, the consumer price index for November declined 0.3%, largely due to a 6.6% decline in gas prices. (Excluding food and energy, prices rose 0.1%, which is still less than the Fed would like, but still below what the Fed would like to see.)

And with oil prices still at five-year lows, this trend is likely to continue.


Meanwhile, market-based measures of inflation have declined to multi-year lows, with two-year breakevens - which represent the market's expectations for inflation in two years' time - falling into negative territory on Thursday, according to Bloomberg.

In her press conference on Wednesday, Federal Reserve Chair Janet Yellen stressed that the Fed views the recent decline in prices spurred by the drop in oil as "transitory," adding that the Fed still expects prices will move back towards its 2% over the longer term.

And so while the eurozone is fighting off outright deflation, which some analysts expect could come to the economic bloc next year, in the US at least, we're still staying away from using what many in the market call "the D word": deflation. 

On Twitter, Bloomberg's Joe Weisenthal noted the recent surge in media stories containing the word "disinflation" (which I guess is now higher by one), which is at the highest level since the early 2000s. 

So when talking to friends and family about inflation measures during this holiday season, "disinflation" is the word you're looking for.