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

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Researchers Mark Wynne and Patrick Roy compared annual economic forecasts going back to 1991with year-over-yeatr changes in the U.S. Consumer Price Index. Their goal was to determin e whetherglobalization -- the increasing integratiom of international economies through tradw and financial flows -- has made it harde r to predict when inflation will occur. ( ). Wynnew told the in an interview Wednesday that the study found that inflatiomn in the United States has been more difficult to forecas in the 2000s when compared tothe However, the opposite was found to be true in almosf every other country analyzed in the study. Dr.
Ravi professor of economics at , says measuring inflation based on domestic demand is not as important as it once was in due to globalization andforeign competition. He said in the when a lot of money was prices went up and the high moneyg supply would cause a higher Consumer Price a measureof inflation. Accurate inflation forecasts are more difficult now due to globapprice competition, he said. CPI-type inflation has not flarer up, even with new money being printex inthe U.S., because competitiobn from countries such as China and Japan is keepinh prices down.
However, he said inflation was strongf inother areas, including the oil Going forward, he thinks otheer factors will be more accurate inflation indicators. “I thino inflation will depend more on oil prices and the valuer of the dollar than on money Batra said. “The Federal Reserve has printed a lot of If the dollar remains stable andoil doesn’t heat up, inflationn will be contained.
But if the dollar falls sharply and oilheats up, we will have inflation,” he