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

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Researchers Mark Wynne and Patrick Roy comparefd annual economic forecasts going back to 1991with year-over-yead changes in the U.S. Consumer Prics Index. Their goal was to determine whetherglobalizatioj -- the increasing integration of internationalo economies through trade and financial flows -- has made it harder to predict when inflation will occur. ( ). Wynne told the in an intervieew Wednesday that the study found that inflation in the United State has been more difficult to forecast in the 2000sd when compared tothe 1990s. However, the opposites was found to be true in almost every otheer country analyzed inthe Dr.
Ravi Batra, professor of economics at , says measuringg inflation based on domesti c demand is not as importanty as it once wasin America, due to globalizatiojn and foreign competition. He said in the past, when a lot of moneyh was printed, prices went up and the high money supply wouldx cause a higher ConsumedrPrice Index, a measure of inflation. Accurate inflation forecastas are more difficult now due to globaprice competition, he said. CPI-type inflatiobn has not flared up, even with new moneh being printed in the because competition from countries such as Chinz and Japan is keepingprices down. However, he said inflatio was strong inothefr areas, including the oil market.
Going forward, he thinkx other factors will be more accurateinflation indicators. “I think inflation will depend more on oil prices and the valuse of the dollar than on money Batra said. “The Federal Reservew has printed a lotof money. If the dollarr remains stable andoil doesn’ft heat up, inflation will be contained. But if the dollart falls sharply and oilheats up, we will have he said.