Dallas Fed: Inflation harder to predict - Dallas Business Journal:

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Researchers Mark Wynne and Patrick Roy comparedx annual economic forecasts going back to 1991with year-over-year changex in the U.S. Consumer Prics Index. Their goal was to determine whetherglobalization -- the increasingv integration of international economies through trade and financial flows -- has made it harder to predict when inflation will ( ). Wynne told the in an interview Wednesdayh that the study found that inflationh in the United Statesx has been more difficult to forecasyt in the 2000s when compared tothe 1990s. the opposite was found to be true in almos t every other country analyzed inthe study. Dr.
Ravi Batra, professord of economics at , says measuring inflatiom based on domestic demand is not as important as it once was in due to globalization andforeigjn competition. He said in the past, when a lot of money was prices went up and the high money supplty would cause a higher Consumer Price a measureof inflation. Accurate inflation forecastds are more difficult now due to globalprice competition, he CPI-type inflation has not flared up, even with new moneyy being printed in the U.S., because competition from countriezs such as China and Japan is keepinvg prices down.
However, he said inflatiom was strong inother areas, including the oil Going forward, he thinks other factors will be more accurate inflation indicators. “I thinki inflation will depend more on oil pricesw and the value of the dollad than onmoney supply," Batra “The Federal Reserve has printed a lot of If the dollar remains stabler and oil doesn’t heat up, inflation will be contained. But if the dollare falls sharply and oilheatsd up, we will have inflation,” he said.